Exam 15: Accounting for Colleges and Universities

What type of college or university must report expenses by functional classification?

During the years ended June 30,2017 and 2018,Jackson University,a private university,conducted a cancer research project financed by a $1,000,000 gift from an alumnus.The entire amount was pledged by the donor on July 10,2016.The gift was restricted to the financing of this particular research project.During the two-year research period,Jackson's gift receipts from the alumnus and research expenses related to the research project were as follows for each fiscal year (FY): FY 2017 FY 2018 Gift receipts $200,000 $800,000 Cancer research expenses $100,000 $900,000 What amount of net assets was released from restriction in 2017?

Private colleges report intangible assets as a separate asset classification; whereas,public colleges report intangible assets as part of the capital asset classification.

The FASB requires that private colleges and universities prepare which of the following financial statements?

The Uniform Prudent Management of Institutional Funds Act specifies the spending rate a not-for-profit should use when establishing its expenditure policies.

Which of the following statements concerning the audits of colleges and universities is ?

An alumnus donates securities to a private college and stipulates that the principal be held in perpetuity and income from the securities be used for faculty travel.Dividends received from the securities should be recognized as increases in:

A statement of cash flows is required by GAAP for both private colleges and universities and public colleges and universities engaged in business-type activities.

Tuition refunds are recorded by debiting Tuition and Fees-Unrestricted.

Tuition scholarships for which there is no intention of collection from the student should be classified by a private university as

Receipt of a $500,000 gift by a private college that must be invested,the earning of which are to be used to support a "chaired" professorship in accounting,would be recorded as an increase in temporarily restricted net assets.

Economic rationality would argue against a university accepting a split-interest agreement in which a fixed annuity is payable to the donor if:

Colleges and universities often make loans to students.How would these loans be reported on the financial statements?

A split-interest agreement is when the university and another beneficiary share in the benefits from a donor's gift.

The organizational form of a college can be governmental,nongovernmental not-for-profit,or for-profit.

Which of the following measures may be useful to decision makers evaluating the financial condition of a college or university?

A private college would record a federal grant received to test a medical device that the federal government intends to patent as Contributions-Temporarily Restricted.

Colleges and universities will report tuition waivers as either a contra-revenue account or an expense,depending on the purpose for which the waiver is given.

Earnings on a private college's endowment investments may increase unrestricted or temporarily restricted net assets,or both.

A private university following the recommendations of the National Association of College and University Business Officers (NACUBO)chart of accounts for reporting expenses,must disclose expenses by program and support function in the notes.