Deck 9: Accounting for Special-Purpose Entities Including Public Colleges and Universities

Question 1

Special purpose governments must be stand-alone local governments.

Answer 1

False

Question 2

City and county governments are not typically classified as special purpose governments.

Answer 2

True

Question 3

According to GASB Statement 34,governmental activities are generally financed through taxes,intergovernmental revenues and other nonexchange revenues.

Answer 3

True

Question 4

A special-purpose government engaged in business-type activities financed in whole or part by fees charged to external parties are usually reported in fiduciary funds.

Question 5

General-purpose governments are those that offer more than one type of basic governmental service,while special-purpose entities generally provide a limited,or single,set of programs or services.

Question 6

Special-purpose governments generally provide a limited set of services or programs.

Question 7

Special-purpose governments that are engaged in both governmental and business-type activities are permitted to combine the fund and government-wide financial statements.

Question 8

The implementation guide for GASB Statement 34 provides a distinction by indicating that "general purpose governments are thought to be those that offer more than one type of basic governmental service.

Question 9

A fire protection district is an example of special-purpose local government.

Question 10

Financial reporting for a special-purpose local government depends on whether that government is engaged in governmental-type,business-type or fiduciary-type activities.

Question 11

Special-purpose governments generally provide a single or limited set of governmental services or programs.

Question 12

Special-purpose governmental entities that are engaged in a single governmental-type activity only are required to prepare only the statements required for governmental fund basis financial statements.

Question 13

Special-purpose governments that are engaged in only one governmental-type activity are permitted to combine the fund and government-wide financial statements

Question 14

Special-purpose governments that are engaged in more than one governmental activity are required to use the full reporting model including MD&A,government-wide and fund-basis statements,notes to the financial statements and RSI.

Question 15

Special-purpose governments that are engaged in both governmental and business-type activities are required to use the full reporting model including MD&A,government-wide and fund-basis statements,notes to the financial statements and RSI.

Question 16

According to GASB Statement No.34,"General-purpose governments are thought to be those that offer more than one type of basic governmental service".

Question 17

Special-purpose governmental entities that are engaged in a single business activity are not required to prepare government-wide financial statements,but may issue only enterprise fund statements.

Question 18

A County could be either a general-purpose or a special purpose government.

Question 19

GASB standards permit exercise of judgment when determining whether a government is general-purpose or special-purpose.

Question 20

Special-purpose governments that are engaged in more than one governmental activity are permitted to combine the fund and government-wide financial statements.

Question 21

Higher education institutions that report as special purpose entities engaged in business-type activities only should report the same net asset classifications (Net investment in capital assets,restricted,unrestricted)as are reported in the government-wide statement of Net Position.

Question 22

Public colleges are never included as component units in the state CAFR.

Question 23

Public institutions of higher education are required to produce a Statement of Cash flows in addition to a Statement of Net Position and a Statement of Revenues,Expenses,and Changes in Net Position.

Question 24

GASB Statement 35 extends the provisions of GASB Statement 34 to both public and private colleges and universities.

Question 25

For financial reporting purposes,governmental health care entities,public school systems,other not-for-profit entities and public colleges and universities may be considered to be special-purpose entities.

Question 26

Revenue for reimbursement grants may be recognized before expenditures take place as long as the grant has been awarded.

Question 27

Tuition waived for work-study and graduate assistants is recognized as an expense when preparing a Statement of Revenues,Expenses,and Changes in Net Position.

Question 28

Public colleges typically report as special-purpose entities engaged only in business-type activities.

Question 29

Most public colleges and universities choose to report as general-purpose entities engaged in only business-type activities.

Question 30

State appropriations for higher education institutions are to be reported as nonoperating revenues in the Statement of Revenues,Expenses,and Changes in Net Position.

Question 31

Public colleges and universities are required to report as special purpose entities engaged in both governmental- and business-type activities because they receive tax dollars and charge user fees.

Question 32

Tuition waived for academic and athletic scholarships decreases student fee revenue when preparing a Statement of Revenues,Expenses,and Changes in Net Position.

Question 33

Public higher education institutions typically report as special-purpose entities engaged in governmental and business-type activities or in governmental-type activities only.

Question 34

GASB Statement 39:
Determining Whether Certain Organizations Are Component Units requires most public college foundations to be reported as discretely presented component units in the college's financial reports.

Question 35

Revenue sources for public colleges include tuition and fees and donations. All other income is reported as unrelated business income.

Question 36

Governmental health care entities,public school systems,and museums are commonly accounted for as special-purpose governments.

Question 37

Public higher education institutions that report as special-purpose entities engaged in business-type activities only are still required to prepare a Management's Discussion and Analysis.

Question 38

General state appropriations are treated as operating revenue of public colleges and universities.

Question 39

No public colleges have the power to issue debt; it must be issued by the state as general obligation debt.

Question 40

GASB requirements for business-type activities of public colleges requires accrual of interest and amortization of debt discount and premium.

Question 41

With respect to public colleges engaged in business-type activities,which of the following is not correct?

A) GASB requirements for business-type activities of public colleges requires accrual account for debt, include accrual of interest and amortization of debt discount and premium.
B) Most public college foundations are required to be reported as discretely presented component units in the college's financial report.
C) Only amounts that are to paid by students and third-party payers can be shown as tuition and fee revenue net of any scholarship discounts and allowances.
D) All of the above are correct

Question 42

Which of the following is not an example of a special-purpose government?

A) Village government
B) Tollway authority
C) Library district
D) Fire protection districts

Question 43

Depending upon the circumstances,in practice public colleges and report as special purpose entities engaged in:

A) Business-type activities only.
B) Both governmental and business-type activities.
C) Governmental activities only.
D) Any one of the above.

Question 44

Public colleges must report tuition income net of athletic scholarships.

Question 45

Which of the following statements is true of a special-purpose government?

A) Special-purpose governments that are engaged in more than one governmental-type activities can combine the fund and government-wide financial statements.
B) Special-purpose governments that are engaged in a single governmental-type activity may combine the fund and government-wide financial statements.
C) Special-purpose governments engaged in only one business-type activity have to prepare government-wide financial statements.
D) Special-purpose governments must be stand-alone local governments.

Question 46

Public colleges who waive fees for graduate assistants must report tuition at the gross amount and expense the fees waived.

Question 47

Which of the following is an example of a special-purpose government?

A) Park district
B) Village government
C) Township government
D) City government

Question 48

According to GASB Statement 33,with respect to public colleges and universities,pledges receivable are recognized as assets and revenues when eligibility requirements are met.

Question 49

Which of the following is not true regarding financial reporting of special-purpose entities?

A) Special-purpose entities might be included as component units in a primary government's financial statements.
B) Special-purpose entities that engage in a single governmental activity may prepare statements that combine government-wide and governmental fund statements.
C) Special-purpose entities that are engaged only in fiduciary activities must prepare a Statement of Activities and a Statement of Fiduciary Net Position.
D) None of the above - all are true.

Question 50

Public colleges who waive fees for graduate assistants must report tuition income net of the fees waived.

Question 51

Reimbursement grants allow revenue to be recognized at the time the grant is made.

Question 52

Public colleges and universities account for revenue bonds using the accrual method to account for interest and amortization of premiums and discounts.

Question 53

Assume a government is a special-purpose government engaged in only one governmental activity. Which financial statements would be required?

A) Government-wide statements only.
B) Statements combining the governmental funds and government-wide statements.
C) Both government-wide and governmental fund basis statements.
D) Either B or C above.

Question 54

Public colleges may depreciate infrastructure or may use the modified approach.

Question 55

Which of the following is not required for a special-purpose local government engaged in only fiduciary type activities?

A) Statement of Fiduciary Net position
B) Statement of Fiduciary Cash Flows
C) Notes to the Financial Statements
D) Required Supplementary Information other than MD&A

Question 56

Which of the following is true with respect to public four-year higher education institutions (public colleges)?

A) Revenue sources for public colleges include tuition and fees, state appropriations and donations. All other income is reported as unrelated business income.
B) Many institutions have most of their restricted resources managed by related entities, known as foundations.
C) No public colleges have the power to issue debt; it must be issued by the state as general obligation debt.
D) Public colleges may not choose to report as special-purpose entities engaged only in business-type activities.

Question 57

Assume a government is a special-purpose entity engaged in fiduciary activities only. Which of the following financial statements would be required?

A) Statement of Fiduciary Net Position and Statement of Changes in Fiduciary Net Position.
B) Statement of Net Position and Statement of Activities.
C) Statement of Net Position, Statement of Activities, Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position.
D) Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position, and Statement of Cash Flows.

Question 58

Assume a government is determined to be a special-purpose government engaged in business-type activities only. Which of the following financial statements would be required?

A) Balance Sheet, Statement of Revenues, Expenditures, and Changes in fund Balances.
B) Statement of Net Position, Statement of Activities, Statement of Cash Flows.
C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.
D) Statement of Net Position and Statement of Activities.

Question 59

Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to include all of the following in its financial statements except?

A) Required supplementary Information
B) Fund basis financial statements
C) Government-wide financial statements
D) None of the above, these are all required

Question 60

Which of the following would not be considered a special-purpose government for financial reporting purposes?

A) A public school system.
B) An art museum.
C) A public hospital.
D) A county board of supervisors.

Question 61

Which of the following is not true regarding the Statement of Revenues,Expenses,and Changes in Net Position for a public college,operating as a special-purpose entity engaged only in business-type activities?

A) The accrual basis of accounting is used.
B) Auxiliary enterprise activities represent revenues and expenses related to units of the college that provide services to students on a user fee basis.
C) Infrastructure must be reported using the modified approach.
D) All of the above are true.

Question 62

Which of the following is true regarding the financial statements for special-purpose entities?

A) Special-purpose entities that are engaged only in one governmental activity may combine government-wide and governmental fund statements.
B) Special-purpose entities that are engaged in fiduciary activities only prepare the statements required for fiduciary funds (Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position).
C) Both of the above.
D) Neither of the above.

Question 63

Which of the following is true regarding financial reporting of special-purpose entities?

A) Special purpose entities might include park districts, school districts, and public colleges and universities.
B) Special-purpose entities, in some cases, have more limited reporting requirements than general-purpose entities.
C) Both of the above are true.
D) Neither of the above is true.

Question 64

Which of the following is not true regarding the Statement of Revenues,Expenses,and Changes in Net Position for a public college?

A) Tuition revenues are reported net of tuition waivers when those waivers require service on the part of the recipient student.
B) Tuition fees waived by the institution in return for services provided by employees and student assistants are shown as expenses.
C) Interest expense is accrued and bond premiums and discounts are amortized.
D) None of the above.

Question 65

A public college had tuition and fees of $21,000,000. Scholarships,for which no services were required,amounted to $2,500,000. Graduate assistantships,for which services were required,amounted to $1,600,000. The amount to be reported by the public college as net tuition and fees would be:

A) $21,000,000.
B) $19,400,000.
C) $18,500,000.
D) $16,900,000.

Question 66

Which of the following is true regarding the Statement of Cash Flows for a public college?

A) The indirect method must be used.
B) The statement is in the same format required for state and local governmental enterprise funds.
C) Both of the above are true.
D) Neither of the above is true.

Question 67

Public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities would have which of the following financial statements?

A) Statement of Net Position, Statement of Activities.
B) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position.
C) Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.
D) None of the above.

Question 68

Which of the following would be true regarding the Statement of Net Position for a public college reporting as a special purpose entity engaged in business type activities only?

A) A classified statement is required, separating current and long-term assets and liabilities.
B) The net asset categories are: net investment in capital assets, restricted and unrestricted.
C) Both of the above are true.
D) Neither of the above is true.

Question 69

Which of the following statements is true regarding accounting and financial reporting for public colleges and universities?

A) Public colleges and universities may choose to report in the same manner as private colleges and universities, using FASB standards.
B) Public colleges and universities may choose to report as special-purpose entities.
C) Both A and B are true.
D) Neither A nor B is true.

Question 70

Which of the following is true regarding the Statement of Revenues,Expenses,and Changes in Net Position for a public college,operating as a special-purpose entity engaged only in business-type activities?

A) Student scholarship allowances should be reported as operating expenses as long as no services are provided.
B) Expenses are recorded when incurred.
C) Depreciation expense is not recorded.
D) None of the above.

Question 71

Special purpose governments engaged only in fiduciary-type activities are required to prepare all of the following except:

A) Statement of Fiduciary Net Position
B) Statement of Cash Flows
C) Statement of Changes in Fiduciary Net Position
D) Management Discussion and Analysis

Question 72

Which of the following is not true regarding the Statement of Revenues,Expenses and Changes in Net Position for a public college reporting as a special purpose entity engaged in business type activities only?

A) The accrual basis of accounting is used to measure revenues and expenses.
B) Encumbrances are recorded at the time purchase orders are issued.
C) Depreciation expense is recorded.
D) All of the above are true.

Question 73

Which of the following is true regarding the Statement of Cash Flows for a public college?

A) Cash received for interest is reported as an increase in cash flows from operating activities.
B) Cash paid for interest is reported as a decrease in cash flows from either noncapital or capital and related financing activities.
C) Both A and B are true.
D) Neither A nor B is true.

Question 74

Which of the following is true regarding the Statement of Cash Flows for a public college?

A) A reconciliation is required, reconciling operating income in the Statement of Revenues, Expenses, and Changes in Net Position to the cash flows provided (used) by operating activities.
B) Cash purchases of capital assets are reported as outflows in the capital related financing activities section.
C) Both A and B are true.
D) Neither A nor B is true.

Question 75

Which of the following statements is (are)true regarding public colleges and universities choosing to report as special-purpose entities engaged in business-type activities only?

A) Endowments would be reported in the Statement of Net Position as Net Position Restricted-Nonexpendable.
B) Capital appropriations from state governments are shown, in the Statement of Revenues, Expenses, and Changes in Net Position, as a category separate from revenues.
C) Both of the above.
D) Neither of the above.

Question 76

Public colleges and universities follow __________ guidelines while private colleges and universities follow ________ guidelines

A) GAO, FASB.
B) FASB, GAO.
C) GASB, FASB.
D) FASB, GASB.

Question 77

Which of the following groups would not be considered a component unit of a special-purpose government,for the purposes of applying GASB Statement 39: Determining Whether Certain Organizations Are Component Units?

A) A university foundation.
B) A hospital auxiliary.
C) A museum foundation.
D) A high school band booster club.

Question 78

Which of the following is true regarding the Statement of Cash Flows for a public college?

A) The direct method must be used.
B) The statement is in the same format required for state and local governmental enterprise funds.
C) Both A and B are true.
D) Neither A nor B is true.

Question 79

Public colleges and universities may choose to report as:

A) Special-purpose entities engaged in governmental and business-type entities.
B) Special-purpose entities engaged in business-type activities only.
C) Either (A) or (B) depending on the nature of their operations.
D) Neither (A) nor (B).

Question 80

A public college had tuition and fees for the year ended June 30,2015 in the amount of $45,000,000. Scholarships,for which no services were required,amounted to $4,800,000. Graduate assistantships,for which services were required,amounted to $2,300,000. The amount to be reported by the college for net tuition and fee revenue would be:

A) $37,900,000.
B) $40,200,000.
C) $42,700,000.
D) $45,000,000.