What do Agency Funds account for?

Agency Funds are used to account for assets held by a government entity as an agent for others. This means that these funds are not owned by the government; rather, they are resources that the government holds temporarily on behalf of other parties, such as individuals, private organizations, or other governmental entities. The key characteristic of Agency Funds is that they involve a trust relationship where the government has a fiduciary responsibility to manage these assets according to the terms of the arrangement.

For example, an Agency Fund might be used to manage funds collected for a specific purpose, such as taxes collected for another governmental unit or funds held for a specific contract or agreement. The government acts purely as a custodian and does not have any operational or legal claim over these assets, which differentiates Agency Funds from other types of governmental funds.

This understanding also clarifies why the other answer choices do not fit. Assets held for public purposes or trust funds for employee benefits signify a different nature of ownership and purpose, while investments held for revenue generation may be related to the government's own revenue-producing activities, not to the agency relationship inherent in Agency Funds.