Exam 11: College and University Accounting Private Institutions

A private college received a grant of $40,000 with purpose restrictions in 2008. In 2009 funds were expended for the purpose outlined in the gift; however, it was not possible to determine whether the restricted funds or unrestricted funds were used. The presumption should be:

Not-for- profit organizations must recognize revenue from a pledge in the year in which the money is received.

A donor made a cash contribution of $50,000 to a private college for the purpose of acquiring a building. The private college properly recorded the gift of cash as a temporarily restricted revenue. When the building is acquired, the college should:

When a private college is the recipient of a perpetual trust held by a third party, the initial contribution revenue is recorded in the permanently restricted net asset class and income received from the trust is recorded as either unrestricted or temporarily restricted investment income, depending on the trust agreement.

Which of the following is true of a Statement of Cash Flows for a private sector college or university?

Which of the following statements is false?

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

Private colleges and universities are required to present a Statement of Cash Flows.

The Financial Accounting Standards Board is responsible for the standards setting for all privately owned universities.

Financial statements prepared for private colleges and universities present net assets as: unrestricted, restricted or invested in capital assets net of related debt.

Which of the following is not a split-interest agreement?

FASB standards require private colleges and universities to present a Statement of Cash Flows.

Record the following transactions on the books of Franklin College, a private college. All of the transactions are for the year 2009. (a) The College received $450,000 in funds that were pledged in 2008, to be used for unrestricted purposes in 2009. (b) The College was awarded $900,000 in grants that are to be used for restricted research purposes. $600,000 in cash was received and $580,000 was expended on these projects. (c) On Dec. 1, the College received a pledge of $2,300,000 to build a new basketball arena. The funds were not expended or received in 2009, but are expected to be received early in 2010. (d) The College had received cash of $500,000 in 2008 to be used to purchase computer equipment for the student labs. The equipment was purchased and put into service in early January 2009. The equipment has a five-year life and the College follows the practice of maintaining the balance of fixed assets (net of depreciation) in the temporarily restricted net asset category. (e) On Dec. 31, the College received an unrestricted pledge to receive $100,000 per year each year for six years, beginning on December 31, 2009. The first installment of $ 100,000 was received on that date. The discount rate is 6%. The present value of six payments of $100,000 is $521,240.

A Charitable gift annuity is a split-interest agreement.

Which of the following student tuition or fee reductions should be listed as a reduction in revenue?

Which of the following is true regarding the investments of private colleges in securities with determinable fair values?

In addition to a Statement of Financial Position and a Statement of Activities, a private college or university is required to present:

A private college received a $2,000,000 gift from a donor. The college's governing board voted to use the $2,000,000 to establish an endowment, with the intent to keep the principal intact forever. The income from the endowment was to be used to fund research in the biology department. How should the college classify the $2,000,000 gift?

How should the income earned by a private college's endowment be classified?

What are the reporting options for the Statement of Financial Position of institutions of higher education as outlined by the NACUBO Financial Accounting and Reporting Manual for Higher Education?