Deck 11: College and University Accounting Private Institutions

Question 1

The AICPA Audit Guide:
Not-for-Profit Organizations applies to all colleges and universities.

Answer 1

False

Question 2

Private colleges and universities record depreciation expense and allocate it to functions.

Answer 2

True

Question 3

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,revenues and expenses are reported at net amounts and gains and losses are reported at gross amounts.

Answer 3

False

Question 4

Private colleges and universities use the same accounting and reporting standards as other private not-for-profit organizations.

Question 5

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,expenses are reported by function,either in the statements or in the notes.

Question 6

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,if both unrestricted and restricted resources are available for a restricted purpose,the FASB requires that the institution recognize the use of restricted resources first.

Question 7

Private colleges and universities and investor-owned proprietary schools report the same categories of net assets.

Question 8

Public colleges and universities are subject to the standards issued by the FASB.

Question 9

Private colleges and universities are required to present a Statement of Cash Flows using the direct method.

Question 10

Private colleges and universities use the same accounting and reporting standards as public colleges and universities.

Question 11

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,contributed services should be recognized when the services create or enhance nonfinancial assets or require specialized skills,are provided by an individual possessing those skills,and would typically be purchased if not provided by donation.

Question 12

Private colleges and universities are required to report net assets within the categories of unrestricted,temporarily restricted and permanently restricted.

Question 13

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,multiyear pledges are recorded as restricted revenue for the present value pledge (net of estimates for uncollectible amounts)when the pledge is made.

Question 14

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,depreciation is recorded. When reporting by function,depreciation is allocated to functional categories.

Question 15

Private colleges and universities use the economic resources measurement focus and the accrual basis of accounting.

Question 16

Private,Not-for-profit Colleges and Universities and Investor-owned Schools follow FASB standards and adhere to the accrual basis of accounting.

Question 17

Investor-owned proprietary schools are subject to the standards issued by the FASB

Question 18

Private colleges and universities are subject to the standards issued by the FASB.

Question 19

Private colleges and universities are required to report net assets within the categories of unrestricted,restricted and net investment in capital assets.

Question 20

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,an institution may decide not to capitalize museum and other inexhaustible collections.

Question 21

With respect to colleges and universities,estimates of uncollectible accounts are accounted for as bad debt expense.

Question 22

A tuition waiver for a student who works as a graduate assistant is treated as a reduction in revenue.

Question 23

Under NACUBO guidelines,tuition waivers resulting from work-study programs are deducted from revenue.

Question 24

A tuition waiver for a student who works as a graduate assistant is treated as compensation expense.

Question 25

With respect to colleges and universities,if a tuition or fee reduction is an employee benefit it should be treated as a compensation expense,rather than a discount.

Question 26

FASB standards require private colleges and universities to present a Statement of Functional Expense.

Question 27

A Pooled life income fund is a type of split-interest agreement.

Question 28

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,investments in stock with determinable fair values and all debt securities are reported at market value.

Question 29

Under FASB standards,true endowments are classified as Permanently Restricted Net Assets.

Question 30

FASB standards require private colleges and universities to present a Statement of Cash Flows.

Question 31

An acceptable alternative to the Statement of Activities for a private college or university is to present a Statement of Unrestricted Revenues,Expenses and Other Changes in Unrestricted Net Assets and a Statement of Changes in Net Assets.

Question 32

With respect to colleges and universities,academic or athletic tuition waivers are accounted for as expenses.

Question 33

A charitable remainder trust and a charitable gift annuity both require a formal trust agreement.

Question 34

When a private college is the recipient of a perpetual trust held by a third party,the initial contribution revenue is recorded in the permanently restricted net asset class,and income received from the trust is recorded as either unrestricted or temporarily restricted investment income,depending on the trust agreement.

Question 35

Under FASB standards,quasi-endowments are classified as Unrestricted Net Assets.

Question 36

Academic or athletic scholarships that do not require service to the college or university are considered scholarship allowances and treated as reductions in revenue.

Question 37

A Research grant program is a type of split-interest agreement.

Question 38

A Charitable lead trust is a type of split-interest agreement.

Question 39

Financial statements prepared for private colleges and universities present net assets as:
unrestricted,restricted,or net investment in capital assets.

Question 40

A Charitable gift annuity is a type of split-interest agreement.

Question 41

College and universities treat uncollectible student accounts as bad debt expense.

Question 42

Funds that are restricted for a certain number of years and then released are considered to be term endowments and are classified as temporarily restricted funds by private colleges and universities.

Question 43

Funds that are restricted for a certain number of years and then released are considered to be quasi-endowments and are classified as temporarily restricted funds by private colleges and universities.

Question 44

NACUBO guidelines require both revenues and expenses for split summer sessions to be apportioned to the two fiscal years.

Question 45

Plant acquired by a private college with either unrestricted or restricted resources may be (1)recorded initially as unrestricted OR (2)recorded initially as temporarily restricted and then classified in accordance with the depreciation schedule.

Question 46

Private colleges and universities are (primarily)subject to financial reporting standards issued by?

A) FASB.
B) GASB.
C) AICPA.
D) None of the above.

Question 47

A pledge of support received by a private college is recorded as revenue when the promise to give is conditional.

Question 48

Inflows from self-supporting university operations,known as auxiliary enterprises,are unrestricted.

Question 49

College and universities treat uncollectible student accounts as reductions in revenue,rather than bad debt expense.

Question 50

Tuition revenue for summer classes spanning two fiscal periods must be allocated on a pro-rata basis.

Question 51

Unless acquired with restricted funds,plant acquired by a private college must be recorded as unrestricted.

Question 52

Private colleges and universities recognize contribution revenue in the year in which the payment is received.

Question 53

Public colleges and universities are (primarily)subject to financial reporting standards issued by:

A) FASB.
B) GASB.
C) AICPA.
D) None of the above.

Question 54

Universities treat athletic scholarships as a reduction in revenue.

Question 55

Tuition revenue for summer classes spanning two fiscal periods must be recorded in the period when the drop date passes and refunds are no longer an option.

Question 56

Private,Not-for-Profit Colleges and Universities must have Statement of Financial Position,Statement of Activities,Statement of Cash Flows,and Notes to the Financial Statements included in their financial report.

Question 57

Private universities follow the authoritative standards of _____ and use the _____ basis of accounting.

A) FASB, Accrual.
B) FASB, Modified-accrual.
C) GASB, Accrual.
D) GASB, Modified-accrual.

Question 58

NACUBO guidelines treat estimates of uncollectible accounts as reductions in revenue.

Question 59

Private colleges and universities recognize contribution revenue in the year in which the unconditional pledge is made.

Question 60

Museum and other inexhaustible collections held by a private college must be capitalized and recorded in the accounts of a private college.

Question 61

In addition to a Statement of Financial Position and a Statement of Activities,a private college or university is required to present:

A) A Statement of Functional Expense.
B) A Statement of Cash Flows.
C) Both (a) and (b).
D) Neither (a) nor (b).

Question 62

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

A) Expenses may be unrestricted or temporarily restricted depending on donor intent.
B) The Statement of Cash Flows must use the direct method.
C) A Statement of Unrestricted Revenues, Expenses and Other Changes in Unrestricted Net Assets and a Statement of Changes in Net Assets may be presented instead of a Statement of Activities.
D) None of the above are true.

Question 63

If a donor were to contribute money with instructions that the funds be invested for a period of time and then released to be used for any purpose,this would be called a(n):

A) Permanent endowment
B) Quasi-endowment
C) Term endowment
D) Unrestricted endowment

Question 64

A government owned college follows whose standards?

A)FASB because GASB doesn't have standards for universities.
B)GASB.
C)AICPA
D)None of the above.

Question 65

Which of the following is true of a Statement of Activities prepared for a private college or university?

A) Only realized gains or losses on investments are reported.
B) Reclassifications from unrestricted to permanently restricted net assets are reported when the governing board designates unrestricted funds for permanent investment in the endowment.
C) All expenses are shown as unrestricted.
D) All of the above are true.

Question 66

Private colleges are required to report net assets in the following categories:

A) Unrestricted and Restricted
B) Temporarily Restricted , Permanently Restricted and Unrestricted
C) Unrestricted, Temporarily Restricted and board designated
D) Restricted, Unrestricted and Temporarily Restricted

Question 67

When a private college or university has a foundation,and that foundation receives contributions specifically directed for the benefit of the college or university,

A) The college or university records no revenue until monies are received from the foundation
B) The college or university must recognize its interest in the contribution as an asset and revenue at the same time as the foundation.
C) At the time of the contribution to the foundation, the college or university records an increase in net assets and unearned revenue. When the money is received the unearned revenue is reduced and revenue is recorded.
D) None of the above

Question 68

Which of the following would not be correct with respect to accounting for colleges and universities under the jurisdiction of the FASB?

A) Contributed services should be recognized only when the services create or enhance nonfinancial assets or require specialized skills, are provided by an individual possessing those skills, and would typically be purchased if not provided by donation
B) Multiyear pledges are recorded as restricted revenue and receivable for the gross amount of the pledge when the pledge is made
C) Depreciation is recorded
D) Investments in stock with determinable fair values and all debt securities are reported at market value

Question 69

The three classes of net assets required to be presented by a private college or university are:

A) Permanently Restricted, Temporarily Restricted, and Unrestricted.
B) Reserved, Unreserved, and Undesignated.
C) Net investment in capital assets, Restricted, and Unrestricted.
D) Educational and General, and Auxiliary Enterprises

Question 70

Which of the following types of college/university would have these components of the Financial Report?
•Statement of Financial Position.
•Statement of Activities.
•Statement of Cash Flows.
•Notes to the Financial Statements.

A) Investor Owned.
B) Public University.
C) Private Not-for-Profit.
D) None of the above.

Question 71

Which of the following is a required statement for a private college?

A) Statement of Changes in Fund Balance.
B) Statement of Revenues and Expenditures.
C) Budgetary Comparison Statement.
D) None of the above is a required statement.

Question 72

According to NACUBO guidelines,what is the correct treatment for recognizing summer school revenues and expenses when a college's fiscal year ends on June 30?

A) Recognize the entire amount of revenues and expenses in the year in which the summer term is predominantly conducted.
B) Recognize the entire amount of revenues and expenses in the year in which the summer term began.
C) Apportion the revenues and expenses to the two fiscal years, following accrual accounting practices similar to those employed by commercial enterprises.
D) Recognize expenses in the year in which they were billed and the expenses in the year in which they were incurred.

Question 73

The FASB has the authority to set accounting standards for all of the following organizations except:

A) Public colleges.
B) Private colleges.
C) For profit proprietary schools.
D) Educational foundations established to support a private college or university.

Question 74

How should the following revenues be reported by a private college?
-$15,000 for the improvement of a study lounge,
-$5,600 in unrestricted contributions,
-$600 unrestricted investment income on endowment investments,
-$11,600 sales of services by auxiliary enterprises.
Unrestricted Restricted

A) 32,800 0
B) 17,800 15,000
C) 17,200 15,600
D) 5,600 27,200

Question 75

On December 1,2015,St.Sebastian University,a private college,received cash of $3,000 and a pledge for another $6,000 to be paid in January 2015. The amounts are to establish a permanent endowment to provide scholarships for music majors. How should this event be recorded on December 1,2015?

A) Cash 3,000 Contributions receivable 6,000
Revenues: Temporarily restricted contributions 9,000
B) Cash 3,000 Contributions receivable 6,000
Revenues: Permanently restricted contributions 9,000
C) Cash 3,000 Revenues: Permanently restricted contributions 3,000
D) Cash 3,000 Contributions receivable 6,000
Revenues: Permanently restricted contributions 3,000
Deferred Revenues 6,000

Question 76

According to the FASB,fixed assets acquired by colleges and universities with either unrestricted or restricted resources are recorded as:

A) Restricted
B) Unrestricted
C) Initially as temporarily restricted and reclassified as unrestricted in accordance with the depreciation schedule
D) Either B or C

Question 77

Which of the following would not be correct with respect to accounting for colleges and universities under the jurisdiction of the FASB?

A) If both unrestricted and restricted resources are available for a restricted purpose, the FASB requires that the institution recognize the use of unrestricted resources first
B) Accrual accounting is used. Revenues and expenses are reported at gross amounts and gains and losses are reported net.
C) Expenses are reported by function, either in the statements or in the notes
D) If an institution decides not to capitalize museum and other inexhaustible collections, note disclosures are required regarding the collections

Question 78

Investment income on Endowments held by private colleges and classified as permanently restricted net assets should be recorded as an increase in:

A) Unrestricted net assets.
B) Temporarily restricted net assets.
C) Permanently restricted net assets.
D) Any of the above, depending on the terms of the trust agreement.

Question 79

For private colleges and universities,reclassifications of temporarily restricted and unrestricted net assets could be made:

A) For satisfaction of purpose restrictions.
B) When time restrictions expire.
C) If the resources donated for fixed assets have been expended on such assets.
D) All of the above.

Question 80

Which of the following is true regarding the investments of private colleges in securities with determinable fair values?

A) Investments are to be carried at fair value or amortized cost, depending upon whether the investments are in equity or debt securities.
B) Investments are to be carried at fair value; unrealized gains and losses are to be reported in the Statement of Activities along with realized gains and losses.
C) Investments are to be carried at the lower of cost or market with unrealized losses reported in the Statement of Activities along with realized gains and losses.
D) None of the above.