Question 1

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

Accepted Answer

The answer of College and universities treat uncollectible student accounts...

Question 2

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.

Accepted Answer

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

Question 3

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.

Accepted Answer

The answer of Funds that are restricted for a certain...

Question 4

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

Accepted Answer

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

Question 5

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.

Accepted Answer

This statement is true. Plant acquired by a private college with either unrestricted or restricted resources can be recorded initially as either unrestricted or temporarily restricted. The classification can then be adjusted based on the depreciation schedule.

Question 6

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

Accepted Answer

Private colleges follow standards established by the FASB, including those specifically for not-for-profit entities. Public colleges and universities following accounting standards established by the GASB and investor-owned colleges follow FASB.

Question 7

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

Accepted Answer

A pledge of support can only be recorded as revenue when it is unconditional, meaning that there are no contingencies or conditions that need to be met for the gift to be received. If the pledge is conditional, it is not considered revenue until the conditions have been met.

Question 8

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

Accepted Answer

Inflows from self-supporting university operations, such as auxiliary enterprises, are not subject to external restrictions and can be used for any purpose deemed appropriate by the university. Therefore, they are considered unrestricted funds.

Question 9

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

Accepted Answer

Colleges and universities treat uncollectible student accounts as reductions in revenue because they have already recognized the revenue from the tuition and fees charged to the student. If the student account becomes uncollectible, it means the college or university cannot receive the revenue, so they reduce the revenue they previously recognized in their financial statements. This is different from bad debt expense, which is usually associated with a business that sells goods or services on credit and treats uncollectible accounts as an expense on their income statement.

Question 10

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

Accepted Answer

Since tuition revenue for summer classes spans over two fiscal periods, it must be allocated on a pro-rata basis, which means it must be distributed proportionally between the two periods based on the amount of time the classes were in session within each period.

Question 11

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

Accepted Answer

The answer of Unless acquired with restricted funds,plant acquired by...

Question 12

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

Accepted Answer

Private colleges and universities recognize contribution revenue in the year in which the contribution is pledged or promised, not necessarily when the payment is received, in accordance with accrual accounting principles.

Question 13

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

Accepted Answer

Public colleges and universities are primarily subject to financial reporting standards issued by the Governmental Accounting Standards Board (GASB). FASB and AICPA standards are typically applicable to private entities or publicly traded corporations.

Question 14

Universities treat athletic scholarships as a reduction in revenue.

Accepted Answer

Athletic scholarships are considered a reduction in revenue for universities because they are essentially providing free tuition, room and board, and sometimes other benefits to student-athletes, which is a cost that would otherwise be paid by the student or their family. However, universities also benefit financially from having successful athletic programs, as they can attract more applicants, boost school spirit, and generate revenue from ticket sales, merchandise, and advertising.

Question 15

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.

Accepted Answer

Because accrual accounting is used, the tuition revenue is split between the two periods that summer school covered.

Question 16

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.

Accepted Answer

Private, Not-for-Profit Colleges and Universities are required to include these financial statements in their financial report as per Generally Accepted Accounting Principles (GAAP).

Question 17

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

Accepted Answer

Private universities in the United States follow the authoritative standards of the Financial Accounting Standards Board (FASB), which sets the Generally Accepted Accounting Principles (GAAP) for private institutions. Private universities also use the accrual basis of accounting, which recognizes revenues and expenses when they are earned or incurred, regardless of cash flow.

Question 18

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

Accepted Answer

This is because uncollectible accounts are considered potential losses, and recognizing them as reductions in revenue helps to accurately reflect the true amount of revenue that can be expected to be collected.

Question 19

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

Accepted Answer

Private colleges and universities follow the generally accepted accounting principles (GAAP), which require recognizing contribution revenue in the year in which the unconditional pledge is made. This is assuming that the pledge is considered a "gift" and meets certain criteria, such as being freely given without any specified return benefit.

Question 20

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

Accepted Answer

Private colleges are not required to capitalize and record inexhaustible collections, such as museum pieces, in their financial accounts if they meet certain criteria, such as being held for public exhibition and protected.

Quiz 11: College and University Accounting Private Institutions