Question 1

The term "restricted" as used in university accounting refers to a constraint on the use of funds which has been:
I.internally imposed.
II.externally imposed.

Accepted Answer

The term "restricted" in university accounting typically refers to funds that have constraints placed on their use by external parties, such as donors or grantors, rather than restrictions imposed internally by the university itself.

Question 2

Investment income for not-for-profit entities may include:
I.interest from debt investments.
II.dividends from equity investments.
III.changes in the fair values of both debt and equity investments.

Accepted Answer

Investment income for not-for-profit entities can include interest from debt investments, dividends from equity investments, and changes in the fair values of both debt and equity investments. This comprehensive approach allows these entities to recognize a variety of income sources from their investment portfolios.

Question 3

Which of the following recognition and measurement bases best summarizes the usual treatment of current contributions to private not-for-profit entities in accordance with ASC 958?

Accepted Answer

D

Question 4

According to ASC 958,not-for-profit entities should report investments in the financial statements at:
I.fair market value.
II.lower of cost or market.

Accepted Answer

According to ASC 958, not-for-profit entities should report investments in the financial statements at fair market value. Therefore, option I is correct and option II is incorrect.

Question 5

In a university,class cancellation refunds of tuition and fees should be recorded as:
I.a reduction of revenue from tuition and fees.
II.a reduction of accounts receivable.

Accepted Answer

Class cancellation refunds should be recorded as a reduction of revenue from tuition and fees because they decrease the total income the university expected to receive from its services.

Question 6

One of the major objectives of ASC 958 is to

Accepted Answer

ASC 958 aims to bring about greater uniformity in the financial statements of all private, not-for-profit organizations by providing guidance on financial statement presentation and disclosure requirements. The objective is to improve transparency and consistency in financial reporting among nonprofit entities.

Question 7

Assume that a private university collects tuition and fees at the beginning of summer school,in which two weeks are offered in the first fiscal year and the remaining six weeks are offered in the second fiscal year.According to the approach recommended by the National Association of College and University Business Officers (NACUBO),the university would:

Accepted Answer

According to the approach recommended by NACUBO, revenue should be recognized when it is earned. In this case, the university has only earned revenue for the two weeks offered in the first fiscal year, therefore it should recognize revenue for two-eighths of the tuition and fees in the first fiscal period and record the remaining six-eighths as deferred revenue. This approach accurately reflects the university's performance and provides a more accurate picture of its financial position.

Question 8

For the year ended June 30,20X9,a university assessed its students a total of $4,000,000 for tuition and fees.Included in this amount was $300,000 of tuition remissions awarded to graduate teaching assistants,and $150,000 of scholarships awarded to undergraduate students.Tuition and fees totaling $3,550,000 were collected during the year ended June 30,20X9.What amount should be reported in the unrestricted fund as net revenue from tuition and fees for the year ended June 30,20X9?

Accepted Answer

The net revenue from tuition and fees should exclude tuition remissions and scholarships. Therefore, $4,000,000 - $300,000 (tuition remissions) - $150,000 (scholarships) = $3,550,000. However, since the question asks for net revenue, the correct amount is $3,850,000, which is $4,000,000 minus only the $150,000 scholarships, as tuition remissions are not considered a reduction in revenue.

Question 9

In accordance with ASC 958,contributions of services are recognized as increases in unrestricted net assets by a private,not for profit entity if which of the following criteria are satisfied?
I.The services received create or enhance nonfinancial assets.
II.The services require specialized skills,are provided by individuals possessing those skills,and would typically need to be purchased if not provided by donations.
III.The services will be performed within the current fiscal year.

Accepted Answer

According to ASC 958, contributions of services are recognized as increases in unrestricted net assets if they satisfy either criterion I (create or enhance nonfinancial assets) or criterion II (require specialized skills and would typically need to be purchased). Criterion III (services performed within the current fiscal year) is not a condition for recognizing contributions of services. Therefore, the correct answer is A) I or II.

Question 10

A private,not-for-profit geographic society received cash contributions which were restricted by the donors for the acquisition of fixed assets.In which section of the statement of cash flows would these cash contributions be reported?

Accepted Answer

Cash contributions restricted for the acquisition of fixed assets are reported under financing activities in the statement of cash flows for not-for-profit organizations.

Question 11

A private university offers graduate assistantships to qualified students each year.In exchange for the waiver of tuition,graduate assistants are required to assist faculty members with research and other activities.Assume a graduate assistant received a $4,000 tuition waiver for the current academic year.Based on these facts,the university should record

Accepted Answer

The answer of A private university offers graduate assistantships to...

Question 12

A private university received $280,000 from student tuition and fees for the year 20X9 summer session.The session began on June 20,20X9,and ended on July 30,20X9.The university's fiscal year end is June 30.According to the AICPA College and University Audit Guide,how should the university report the $280,000 of receipts in its financial statements for the year ended June 30,20X9?

Accepted Answer

The answer of A private university received $280,000 from student...

Question 13

According to ASC 958,the statement of financial position of a private university should report the excess of the university's assets over its liabilities as:

Accepted Answer

According to ASC 958, a private university's statement of financial position should report the excess of the university's assets over its liabilities as unrestricted, temporarily restricted, and permanently restricted net assets. This is because private universities typically have resources that are subject to donor restrictions or other limitations, which must be separately reported in the financial statements. Therefore, the best choice is option D, which reflects the requirement to report net assets by category of restriction.

Question 14

A private university received $2,640,000 from student tuition and fees for the year 20X6 summer session.The session began on May 16,20X6,and ended on July 15,20X6.The university's fiscal year end is June 30.According to the AICPA College and University Audit Guide,how should the university report the $2,640,000 of receipts in its financial statements for the year ended June 30,20X6?

Accepted Answer

The answer of A private university received $2,640,000 from student...

Question 15

Which of the following is an example of volunteer services received by a not-for-profit entity that should be recognized as revenue?
I.Services requiring specialized skills,provided by individuals with those skills,that otherwise would have to be purchased.
II.Services of lay faculty at a private university operated by a religious order.
III.Services that create or enhance non-financial assets,regardless of whether or not they require specialized skills.

Accepted Answer

The answer of Which of the following is an example...

Question 16

Gray College,a private not-for-profit institution,received a contribution of $100,000 for faculty research.The donation was received in 20X1 and $80,000 was spent in 20X1.As a result of these transactions,Gray College should report on its 20X1 statement of activities a:

Accepted Answer

The $100,000 contribution is considered temporarily restricted until the faculty research is completed. Since $80,000 was spent in 20X1, only $20,000 of the contribution remains temporarily restricted at the end of the year. Therefore, Gray College should report a $20,000 increase in temporarily restricted net assets on its 20X1 statement of activities.

Question 17

According to ASC 958,Not-For-Profit entities should recognize depreciation/amortization:
I.on all long-lived tangible assets.
II.on all long-lived intangible assets.

Accepted Answer

Only long-lived tangible assets should be recognized for depreciation/amortization according to ASC 958. Long-lived intangible assets are not eligible for depreciation.

Question 18

Which rule-making body is currently setting standards of financial reporting for private not-for-profit universities and for public (governmental)universities?

Accepted Answer

The answer of Which rule-making body is currently setting standards...

Question 19

On the statement of activities for a private,not-for-profit literary society,expenses decrease which of the following classes of net assets?
I.temporarily restricted net assets
II.unrestricted net assets

Accepted Answer

Expenses decrease unrestricted net assets because they are not subject to any restrictions. Temporarily restricted net assets are restricted by donors or other external factors, so expenses do not affect them directly.

Question 20

A not-for-profit organization received a donation temporarily restricted as to use.The donated amount was later spent in accordance with the restriction.In which category(ies)of net assets should the related revenues and expenses be recognized?

Accepted Answer

The answer of A not-for-profit organization received a donation temporarily...

Quiz 19: Not-For-Profit Entities

The term "restricted" as used in university accounting refers to a constraint on the use of funds which has been: I.internally imposed. II.externally imposed.

Investment income for not-for-profit entities may include: I.interest from debt investments. II.dividends from equity investments. III.changes in the fair values of both debt and equity investments.

Which of the following recognition and measurement bases best summarizes the usual treatment of current contributions to private not-for-profit entities in accordance with ASC 958?

According to ASC 958,not-for-profit entities should report investments in the financial statements at: I.fair market value. II.lower of cost or market.

In a university,class cancellation refunds of tuition and fees should be recorded as: I.a reduction of revenue from tuition and fees. II.a reduction of accounts receivable.