Deck 11: College and University Accounting

Question 1

FASB standards require private colleges and universities to use encumbrances.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,if an institution decides not to capitalize museum and other inexhaustible collections,note disclosures are required regarding the collections.

Answer 3

True

Question 4

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

Question 5

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

Question 6

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 7

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

Question 8

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

Question 9

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

Question 10

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 11

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

Question 12

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 13

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

Question 14

Private colleges and universities are required to report net assets in the same manner as investor-owned proprietary schools.

Question 15

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

Question 16

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,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.

Question 17

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

Question 18

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 unrestricted resources first.

Question 19

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,multiyear pledges are recorded as restricted revenue and receivable for the gross amount of the pledge when the pledge is made.

Question 20

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

Question 21

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

Question 22

A charitable remainder trust and a charitable gift annuity differ in that no formal trust agreement exists for a charitable gift annuity.

Question 23

Plant acquired by a private college with either unrestricted or restricted sources must be recorded initially as temporarily restricted and then reclassified in accordance with the depreciation schedule.

Question 24

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

Question 25

Private colleges and universities record depreciation expense.

Question 26

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 27

Museum and other inexhaustible collections held by a private college may or may not be capitalized and recorded in the accounts of a private college.

Question 28

With respect to colleges and universities,estimates of uncollectible accounts are accounted for as reductions in revenue rather than bad debt expense.

Question 29

A Charitable lead trust is a split-interest agreement.

Question 30

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

Question 31

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

Question 32

A Research grant program is a split-interest agreement.

Question 33

A Charitable gift annuity is a split-interest agreement.

Question 34

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

Question 35

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

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

Private colleges and universities are required to present a Statement of Cash Flows.

Question 38

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 39

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

Question 40

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 41

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

Question 42

College and universities treat uncollectible accounts as bad debt expense.

Question 43

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

A) Unrestricted and restricted
B) Temporarily restricted , donor restricted and unrestricted
C) Unrestricted, temporarily restricted and board designated
D) Restricted, unrestricted and temporarily restricted

Question 44

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

Question 45

Universities treat athletic scholarships as an expense to the athletic department who must pay for the scholarship out of its net revenues.

Question 46

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

Question 47

Private colleges and universities recognize revenue from a pledge in the year in which the money is received.

Question 48

The Financial Accounting Standards Board is responsible for the standards setting for privately owned universities.

Question 49

Universities treat athletic scholarships as a reduction in revenue.

Question 50

Public Colleges and Universities are subject to standards issued by the GASB.

Question 51

Only not-for-profit organizations follow FASB guidelines AND report the equity as unrestricted,temporarily restricted,or permanently restricted.

Question 52

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 53

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 54

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 55

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

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

Question 58

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 59

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

Question 60

Inflows from self-supporting university operations,known as auxiliary enterprises,are restricted as to use.

Question 61

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 the lower of cost or market.
B) Investments are to be carried at fair value or amortized cost, depending upon whether the investments are in equity or debt securities.
C) 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.
D) None of the above.

Question 62

Which of the following would not be considered a split-interest agreement,according to the Not-for-Profit Guide?

A) Charitable remainder trusts.
B) Permanent income-sharing agreements.
C) Charitable gift annuities.
D) Pooled (life) income funds.

Question 63

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) 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.
C) The Statement of Cash Flows must use the direct method.
D) None of the above is true.

Question 64

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 records an increase in net assets and unearned revenue. When the money is received the unearned revenue is reduced and revenue is recorded.
C) The college or university must recognize its interest in the contribution as an asset and revenue at the same time as the foundation.
D) The college or university records receipt of money from the foundation as it would any other contribution of resources.

Question 65

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

Question 66

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 (c).
D) Neither (a) nor (c).

Question 67

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 68

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) Invested in Capital Assets net of Related Debt, Restricted, and Unrestricted.
D) Educational and General, and Auxiliary Enterprises.

Question 69

According to the FASB,plant 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 70

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 71

A donor gave a gift of $40,000 cash to a private college in 2011 with instructions that the funds be expended for psychology research.The funds were expended in 2012.The private college would recognize the $40,000 as:

A) Deferred revenue in 2011 and as revenue in 2012, increasing unrestricted net assets. The expense would be recognized in 2012.
B) Deferred revenue in 2011 and as revenue in 2012, increasing temporarily restricted net assets. The expense would be recognized also in 2012, and the resources would be reclassified from temporarily restricted net assets to unrestricted net assets in 2012.
C) Either (b) or (c), depending upon the policy of the private college.
D) Revenue in 2011 increasing temporarily restricted net assets; recognize the expense in 2012, and reclassify the resources from temporarily restricted net assets to unrestricted net assets in 2012.

Question 72

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

A) All expenses are shown as unrestricted.
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) Only realized gains or losses on investments are reported.
D) All of the above are true.

Question 73

Which of the following would not be an example of an unrestricted inflow for a private college or university?

A) Tuition and fees
B) Governmental appropriations
C) Sales and services of auxiliary enterprises
D) Split interest agreements

Question 74

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 75

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 GASB 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 76

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

Question 77

The NACUBO Financial Accounting and Reporting Manual treats estimates of uncollectible accounts as:

A) Bad debt expense
B) A reduction in tuition and fee revenue
C) Either bad debt expense or a reduction in tuition and fee revenue as long as the policy is consistently applied
D) None of the above; colleges and universities must use the direct write off method

Question 78

A private university received $18,000,000 in tuition and fees during an academic year.Graduate assistantships,for which services were required,were awarded in the amount of $1,200,000.Scholarships,for which no services were required,were awarded in the amount of $1,400,000.The net tuition and fees that would be reported in the Statement of Activities would be:

A) $18,000,000.
B) $16,800,000.
C) $16,600,000.
D) $15,400,000.

Question 79

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 80

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.