Question 1

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 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

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

When a donor specifies a particular date or event after which the principal of the endowment fund may be expended, it is referred to as a term endowment fund. In contrast, a pure endowment fund does not allow for any expenditures of the principal, a quasi endowment fund allows for limited expenditures of the principal, and an expendable endowment fund permits expenditures of both the income and principal without restrictions.

Question 4

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 5

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 6

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

Accepted Answer

The answer of A municipality's capital projects fund is similar...

Question 7

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 8

Investments are reported by NNOs at

Accepted Answer

Investments are generally reported at fair value unless they qualify for certain exceptions. Under the fair value method, the fair value of the investment is reported on the balance sheet and any changes in the fair value are reported on the income statement. This method provides users of financial statements with more relevant and reliable information about the value of the investment.

Question 9

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

Accepted Answer

All of the other options (unexpended plant fund, funds for renewals and replacements, and investment in plant) are types of plant funds commonly found in colleges and universities. Plant replacement and expansion fund is not a commonly recognized plant fund in higher education institutions.

Question 10

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 11

The basic financial statements for all NNOs include a:

Accepted Answer

The basic financial statements for all NNOs include a balance sheet, statement of activities, and statement of cash flows. The balance sheet provides a snapshot of the organization's financial position at a certain point in time, while the statement of activities shows the organization's revenues and expenses over a certain period. The statement of cash flows shows the organization's inflows and outflows of cash during the same period.

Question 12

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 hospitals...

Question 13

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.

Question 14

All NNOs have current restricted funds and unrestricted funds EXCEPT:

Accepted Answer

Hospitals do not have unrestricted funds because they primarily rely on government funding, insurance payments, and donations, all of which have restrictions on how they can be used. They may have some current restricted funds, but typically do not have unrestricted funds.

Question 15

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 16

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 according to Generally Accepted Accounting Principles (GAAP). This is because the accrual basis provides more accurate and transparent financial statements, which is important for these organizations when presenting their financial information to stakeholders and potential donors. The cash basis would not provide sufficient information on the organization's financial performance, and the modified accrual basis is typically used only for governmental entities.

Question 17

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 18

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

Accepted Answer

Revenues and expenses of hospitals are recorded in the General Fund. The General Fund is used to account for general operating activities, such as patient care, salaries, and supplies. The Endowment Fund is used to account for gifts or donations to the hospital, while the Plant Replacement Fund is used to account for major repairs or replacement of the hospital's physical assets. The Specific Purpose Fund is used for specific programs or projects that are separate from the hospital's general operating activities.

Question 19

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 20

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

Accepted Answer

Special entities can be either government-owned or privately owned, but they are always not-for-profit organizations. Therefore, they cannot be publicly owned, as that would imply that they are for-profit companies traded on a public stock exchange.

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

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?

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) :