Deck 13: Colleges and Universities

Question 1

Private not-for-profit colleges and universities are subject to the same FASB standards as other not-for-profit entities.

Answer 1

True

Question 2

Use the following information for Questions
Lane College Foundation is governed by a board, some members of which are appointed by the President of Lane College and some of which are elected by the alumni.It was created to solicit and accept donations on behalf of Lane College, a private not-for-profit college.Lane College and its Foundation are deemed to be financially interrelated.All funds collected by the Foundation must be used to support activities of Lane College.The Foundation Board can select which activities of Lane College it supports.Lane Foundation received a $1 million bequest from the estate of a 1940 graduate.
At the time the Foundation receives the donation, the Foundation should debit Cash for $1 million and credit what account for $1 million?

A)Unrestricted revenue.
B)Temporarily restricted revenue.
C)Liability.
D)No entry should be made by the Foundation.

Answer 2

A

Question 3

Most colleges and universities classify revenues by source and expenses by function.

Answer 3

True

Question 4

Current operating expenses of a public college may be classified by which of the following?

A)Object classes
B)Organizational Units
C)Program functions
D)All of the above
E)Only B & C

Question 5

Which of the following criteria must be met for a public university to report affiliated organizations as component units?
I)The university is entitled to access those resources
II)The economic resources are significant to the component
III)The economic resources received or held are almost entirely for the direct benefit of the university

A)I only
B)I & II only
C)III only
D)II only
E)I, II, & III

Question 6

Tuition revenue should be reported net of tuition discounts and scholarships.

Question 7

Under GASB 39, colleges and universities are required to bring their affiliated medical organizations into their financial reports.

Question 8

Sheridan Public School Foundation had available temporarily restricted gifts in excess of $200,000.The Foundation decided to invest this money temporarily until it needs the funds for the restricted purpose.The donors had made no specific stipulations regarding investment earnings but the Foundation board had voted to use the earnings on the projects for which the gift had originally been restricted.At year-end, the securities had a fair value of $200,500.The appropriate way to recognize the change in fair value is

A)Debit Investment $500; Credit Unrestricted Revenue $500.
B)Debit Investment $500; Credit Temporarily Restricted Revenue $500.
C)Debit Investment $500; Credit Permanently Restricted Revenue $500.
D)No entry should be made until the securities are sold.

Question 9

Use the following information for Questions
Lane College Foundation is governed by a board, some members of which are appointed by the President of Lane College and some of which are elected by the alumni.It was created to solicit and accept donations on behalf of Lane College, a private not-for-profit college.Lane College and its Foundation are deemed to be financially interrelated.All funds collected by the Foundation must be used to support activities of Lane College.The Foundation Board can select which activities of Lane College it supports.Lane Foundation received a $1 million bequest from the estate of a 1940 graduate.
At the time the Foundation receives the donation, Lane College should debit Asset $1 million and Credit what account for $1 million?

A)Unrestricted revenue.
B)Temporarily restricted revenue.
C)Liability.
D)No entry should be made by Lane College.

Question 10

In accounting for colleges and universities, related entities should either be disclosed in the Notes to the Financial Statements or reported as component entities, depending on the degree of control and economic interest.

Question 11

GASB requires that revenues be classified into three categories of restrictiveness based on donor specification.

Question 12

Financial statements for Smith College, a church-supported college, should be prepared according to standards set by

A)AICPA.
B)FASB.
C)GASB.
D)Smith may choose any of the above.

Question 13

Investments of a public college must be reported at fair value.

Question 14

Katerah College, a private college, received a $1 million donation.The donor specified that the principal of her gift could never be used for program activities but the earnings on the principal must be used to provide scholarships to academically qualified students in the business school.The $1 million gift would increase which of the following categories of net assets?

A)Unrestricted net assets.
B)Temporarily restricted net assets.
C)Permanently restricted net assets.
D)Either b and c.

Question 15

In a public university setting, general administration and sponsored research are examples of revenues classified by source.

Question 16

For a not-for-profit college or university, which of the following categories of net assets is NOT appropriate in its external financial statements?

A)Unrestricted net assets.
B)Temporarily restricted net assets.
C)Permanently restricted net assets.
D)None.All of the above are appropriate.

Question 17

Long lived assets held by public universities are carried at cost, or fair value if donated.

Question 18

Government public colleges and universities must adhere to the FASB pronouncements.

Question 19

During the current year, Kayla University received a $50,000 gift from an alumna who specified that it must be used to pay travel costs for faculty to attend health care conferences in foreign countries.During the year the university spent $8,000 to support travel to a health care conference in Italy.The $8,000 disbursement will cause a NET decrease in which class of net assets?

A)Unrestricted net assets.
B)Temporarily restricted net assets.
C)Permanently restricted net assets.
D)Cannot be determined.

Question 20

An accountant has encountered a perplexing financial reporting issue related to the private college for which he is preparing financial statements.The issue is not specifically addressed by FASB Statements.To what standards would the accountant first look for guidance?

A)GASB Statements.
B)AICPA accounting and auditing guide, Not-for-Profit Organizations.
C)AICPA accounting and auditing guide, Audits of Colleges and Universities and/or AICPA SOP 74-8, Financial Accounting and Financial Reporting by Colleges and Universities.
D)College textbooks.

Question 21

A not-for-profit university operates its college book-store as an auxiliary enterprise.During the year the store has revenues of $30 million and expenses of $27 million.In its statement of activities the university should report

A)operating revenues of $3 million
B)operating revenues of $30 million
C)nonoperating revenues of $3 million
D)nonoperating revenues of $30 million

Question 22

During the year, Dakota University's board of trustees established a $500,000 fund to be retained and invested for scholarship grants.The fund earned $30,000, which had not been distributed by December 31.What amount should Dakota report in a Board designated quasi endowment fund's net assets at December 31?

A)$0
B)$30,000
C)$500,000
D)$530,000

Question 23

A public university had tuition and fees for the year ended June 30, 2012, in the amount of $27,000,000 Scholarships, for which no services were required, amounted to $2,100,000.Graduate assistantships, for which services were required, amounted to $1,950,000.The amount to be reported by the university as net tuition and fee revenue would be

A)$27,000,000
B)$25,050,000
C)$24,900,000
D)$22,950,000

Question 24

In 2011, a government university was awarded a federal reimbursement grant of $18 million to carry out research.Of this, $12 million was intended to cover direct costs and $6 million to cover overhead.In a particular year, the university incurred $4 million in allowable direct costs and received $3.4 million from the federal government.It expected to incur the remaining costs and collect the remaining balance in 2012.For 2011 it should recognize revenues from the grant of

A)$3.4 million
B)$4.0 million
C)$6.0 million
D)$18.0 million

Question 25

A not-for-profit university maintained as endowment of $800,000, the income of which was restricted for an annual conference on international relations.In a particular year, the market value of the endowment increased by $80,000.The university held a conference on international relations at a cost of $86,000.The university should report

A)no revenue and unrestricted expenses of $86,000
B)unrestricted revenues of $80,000 and unrestricted expenses of $86,000
C)temporarily restricted revenues of $80,000, temporarily restricted expenses of $80,000 and unrestricted expenses of $6,000
D)permanently restricted revenues of $80,000 and unrestricted expenses of $86,000

Question 26

Although it no longer applies to external financial reporting, AICPA 1973 Audit and Accounting Guide for Colleges and Universities provides which of the following in the fund structure

A)Plant funds
B)Loan funds
C)Annuity funds
D)All of the above

Question 27

In June 2012, a public university bills and collects $45 million in tuition for the summer semester that runs from June 1 through July 15.In addition, in May and June it bills $300 million for the fall semester that runs from September 1 through December 15.Of this amount it collects only $120 million expecting to collect the balance prior to September 1.In its statement of revenues and expenses for its year ending June 30, 2012 it should recognize as tuition revenue

A)$30 million
B)$45 million
C)$150 million
D)$165 million