Question 1

Which of the following is used for current expenditures by a college?

Accepted Answer

Unrestricted Current Funds can be used for any purpose, including current expenditures, as decided by the college's governing body. Restricted Current Funds are designated for specific purposes, which can include current expenditures if the donor specifies such use.

Question 2

The following funds were among those on Cole University's books at April 30, 2017:  How much of the above-mentioned funds should be included in plant funds?

Accepted Answer

D

Question 3

Special entities are not-for-profit organizations that are:

Accepted Answer

Special entities can be either government owned or privately owned, as long as they operate on a not-for-profit basis.

Question 4

Investments are reported by NNOs at

Accepted Answer

Investments by Nonprofit Organizations (NNOs) are typically reported at fair value, reflecting the current market value of the investments. This approach provides a more accurate and up-to-date reflection of the organization's financial position.

Question 5

In accounting for loan funds, revenue is recorded when the:

Accepted Answer

Revenue from loan funds in accounting is recorded when the contribution is received, as this is when the funds are actually available for use by the institution.

Question 6

A municipality's capital projects fund is similar to a university's:

Accepted Answer

A municipality's capital projects fund is used for major capital outlays, similar to a university's renewals and replacements fund, which is used for major repairs and replacements of plant assets.

Question 7

Board designated funds should be accounted for as:

Accepted Answer

Board designated funds are considered unrestricted because the board, which imposed the designation, can also choose to remove it. These funds are not legally restricted by external parties, hence they are not categorized as restricted funds.

Question 8

For a university, the receipt of assets for operating activities that have external restrictions as to the purposes for which they can be used is recorded by crediting:

Accepted Answer

Contribution Revenue is credited when a university receives assets for operating activities with external restrictions, as this reflects the increase in resources that are earmarked for specific purposes by the donor. This accounting treatment aligns with recognizing the inflow of resources that are restricted for particular uses, distinguishing them from unrestricted contributions.

Question 9

All of the following are a plant fund in colleges and universities EXCEPT:

Accepted Answer

The answer of All of the following are a plant...

Question 10

The basic financial statements for all NNOs include a:

Accepted Answer

The basic financial statements for all Nonprofit Organizations (NNOs) include a Balance Sheet (also known as Statement of Financial Position), Statement of Activities (similar to an income statement in for-profit organizations), and Statement of Cash Flows. These documents provide a comprehensive overview of the organization's financial health, activities, and cash flow.

Question 11

Resources of an unrestricted fund that are designated by the governing board for endowment purposes are accounted for in the unrestricted fund by all NNOs EXCEPT:

Accepted Answer

The answer of Resources of an unrestricted fund that are...

Question 12

Revenues and expenses of hospitals are recorded in the accounts of the:

Accepted Answer

Revenues and expenses of hospitals are typically recorded in the General Fund, as this fund is used for the day-to-day operations of an organization, including hospitals.

Question 13

Tuition waivers for which there is no intention of collection from the student should be classified by a college as:

Accepted Answer

The answer of Tuition waivers for which there is no...

Question 14

All NNOs have current restricted funds and unrestricted funds EXCEPT:

Accepted Answer

The answer of All NNOs have current restricted funds and...

Question 15

Under Southdale Hospital's established rate structure, the hospital would have earned patient service revenue of $7,000,000 for the year ended December 31, 2017. However, Southdale did not expect to collect this amount because of charity allowances of $1,000,000 and discounts of $500,000 to third party payers. In May 2017, Southdale purchased bandages from Ace Supply Co. at a cost of $5,000. However, Ace notified Southdale that the invoice was being cancelled and that the bandages were being donated to Southdale. For the year ended December 31, 2017, how much should Southdale record as patient service revenue?

Accepted Answer

Patient service revenue is recorded at the established rate before deductions for charity allowances and discounts to third-party payers. The donation of bandages does not affect patient service revenue.

Question 16

Which of the following statements related to pledges is incorrect?

Accepted Answer

Pledges are generally considered to be promises or intentions to give, rather than enforceable contracts. While some pledges may have legal standing under certain conditions, many do not automatically constitute legally binding agreements.

Question 17

Which basis of accounting should a voluntary health and welfare organization use?

Accepted Answer

Voluntary health and welfare organizations should use the accrual basis of accounting for all funds to properly match revenues with the expenses incurred in earning them and to provide a more accurate picture of their financial position.

Question 18

When the donor has specified a particular date or event after which the principal of the Endowment Fund may be expended, the Endowment Fund is referred to as a(n):

Accepted Answer

A term endowment fund is one where the donor has specified a particular date or event after which the principal of the fund may be expended. This contrasts with a pure endowment, where the principal is typically not to be expended, and a quasi endowment, which is usually set aside by an institution's governing board rather than being donor-restricted.

Question 19

Most property, plant and equipment transactions of hospitals are accounted for in the:

Accepted Answer

The answer of Most property, plant and equipment transactions of...

Question 20

Under Southdale Hospital's established rate structure, the hospital would have earned patient service revenue of $7,000,000 for the year ended December 31, 2017. However, Southdale did not expect to collect this amount because of charity allowances of $1,000,000 and discounts of $500,000 to third party payers. In May 2017, Southdale purchased bandages from Ace Supply Co. at a cost of $5,000. However, Ace notified Southdale that the invoice was being cancelled and that the bandages were being donated to Southdale. For the year ended December 31, 2017, Southdale should record the donation of bandages as:

Accepted Answer

The donation of bandages should be recorded as other operating revenue of $5,000, as it is a contribution of goods that can be used in the hospital's operations, thus increasing its operating revenue.

Quiz 19: Accounting for Nongovernment Nonbusiness Organizations: Colleges and Universities, Hospitals and Other Health Care Organizations