Exam 9: Accounting for Special-Purpose Entities, Including Public Colleges and Universities

Which of the following is true regarding the Statement of Revenues, Expenses and Changes in Net Assets for a public college reporting as a special purpose entity engaged in business type activities only?

Southern State University has chosen to report as a public university reporting as a special-purpose entity engaged only in business-type activities. Deferred Revenues were reported as of July 1, 2008 in the amount of $5,600,000. Record the following transactions related to revenue recognition for the year ended June 30, 2009. Include in the account titles the proper revenue classification (operating revenues, nonoperating revenues, etc.): 1. Deferred revenues related to unearned revenues for the summer session, which ended in August $2008 .$ 2. During the fiscal year ended June 30,2009 , student tuition and fees were assessed in the amount of $\$ 65,000,000$ . Of that amount, $\$ 51,000,000$ was collected in cash. Also, of that amount, $\$ 6,000,000$ pertained to that portion of the 2009 summer session that took place after June 30, $2009 .$ 3. Student scholarships, for which no services were required, amounted to $\$ 2,000,000$ . Students applied these scholarships to their tuition bills at the beginning of the fall and spring semesters. 4. Student scholarships and fellowships, for which services were required, such as graduate assistantships, amounted to $\$ 2,750,000$ . These students also applied their scholarship and fellowship awards to their tuition bills at the beginning of each semester. 5. Auxiliary enterprise revenues amounted to $\$ 5,100,000$ . 6. The state appropriation for operations amounted to $\$ 45,000,000$ . 7. The state appropriation for capital outlay amounted to $\$ 16,500,000$ . 8. Gifts for endowment purposes amounted to $\$ 2,000,000$ . Gifts for unrestricted purposes amounted to $\$ 3,000,000$ . Interest income, all unrestricted, amounted to $\$ 600,000$ .

Special-purpose governments generally provide a single or limited set of governmental services or programs.

According to GASB Statement 34, governmental activities are generally financed through taxes, intergovernmental revenues and other nonexchange revenues.

What is the journal entry on June 1 for Northern? A. Cash and Cash Equivalents 2,400,000 Operating Revenues-Student Tuition and Fees 2,400,000 B. Cash and Cash Equivalents 2,400,000 Deferred revenue 2,400,000 C. Cash and Cash Equivalents 800,000 Cash and Cash Equivalents, Reserved 1,600,000 Operating Revenues-Student Tuition and Fees 800,000 Deferred Revenues-Student Tuition and Fees 1,600,000 D. Cash and Cash Equivalents 2,400,000 Operating Revenues-Student Tuition and Fees 800,000 Deferred Revenues-Student Tuition and Fees 1,600,000

GASB categorizes general state appropriation as nonoperating revenue for public colleges and universities.

A public college had tuition and fees of $20,000,000. Scholarships, for which no services were required, amounted to $2,000,000. Graduate assistantships, for which services were required, amounted to $1,000,000. The amount to be reported by the public college as net tuition and fees would be:

Which of the following groups would probably not be considered a component unit of a special-purpose government, for the purposes of applying GASB Statement 39?

Assume a government is a special-purpose government engaged in only one governmental activity. Which financial statements would be required?

GASB categorizes general state appropriation as operating revenue for public colleges and universities.

Reimbursement grants require that the appropriate expenditure be made before the revenue can be recognized.

Which of the following statements is true regarding accounting and financial reporting for public colleges and universities?

According to GASB Statement 33, with respect to public colleges and universities, pledges receivable are recognized as assets and revenues when eligibility requirements are met.

With respect to public colleges and universities, expenses are reported by:

Western State University had the following account balances as of June 30, 2009. Debits are not distinguished from credits, so assume all accounts have a "normal" balance (i.e. cash is a debit and accounts payable a credit) Accounts payable 420,000 Accounts receivable (net) 400,000 Capital assets, net of depreciation 7,000,000 Cash and cash equivalents 115,000 Cash and cash equivalents - restricted (noncurrent) 245,000 Deferred revenue-current 325,000 General obligation bonds payable - current portion (related to capital acquisition) 390,000 General obligation bonds payable (related to capital acquisition) 2,500,000 Inventories 710,000 Investments - Endowment 4,400,000 Investments Long-term 1,500,000 Investments Short-term -unrestricted 900,000 Net assets-restricted-expendable 1,300,000 Net assets-restricted-nonexpendable 4,400,000 Revenue bonds payable (related to capital acquisition) 2,000,000 Net Assts - Unrestricted ????????? Required: Prepare, in good form, a Statement of Net Assets for Western State University as of June 30, 2009.

What is the journal entry to record the scholarship allowances? A. Scholarships and Fellowships Expense 1,200,000 Accounts Receivable 1,200,000 B. Operating Revenue Deduction -Scholarship Allowances 1,200,000 Accounts Receivable 1,200,000 C. Operating Revenue Deduction -Scholarship Allowances 900,000 Deferred Revenues 900,000 D. Not recorded because it was deducted from tuition revenue before revenue it was recorded

The following grants and contracts were awarded to Northern University: Federal grants and contracts: $5,000,000 State grants and contracts: $2,125,000 All the money was collected by the University when the awards were made. Restrictions on the money is as follows: Federal: Research 3,000,000 Scholarships 2,000,000 State: Research 1,125,000 Scholarships 1,000,000 What is the journal entry to record this event? A. Cash and Cash Equivalents 7,125,000 Operating Revenues - Research 4,125,000 Operating Revenues - Scholarships \& Fellowships 3,000,000 B. Cash and Cash Equivalents 5,000,000 Restricted Cash and Cash Equivalents 2,125,000 Operating Revenues - Research 4,125,000 Operating Revenues - Scholarships \& Fellowships 3,000,000 C. Restricted Cash and Cash Equivalents 7,125,000 Operating Revenues - Restricted - Federal Grants 5,000,000 Operating Revenues - Restricted - State Grants 3,000,000 D. Restricted Cash and Cash Equivalents 7,125,000 Operating Revenues - Restricted - Federal Grants And Contracts - Research 3,000,000 Operating Revenues - Restricted - Federal Grants And Contracts - Scholarships and Fellowships 2,000,000 Operating Revenues - Restricted - State Grants And Contracts - Research 1,125,000 Operating Revenues - Restricted - Federal Grants And Contracts - Scholarships and Fellowships 1,000,000

GASB Statement 39 requires most public college foundations to be reported as discretely presented component units in the college's financial reports.

Which of the following is true regarding the Statement of Revenues, Expenses and Changes in Net Assets for a public college?

Which of the following is true regarding financial reporting of special-purpose entities?