Exam 16: Accounting for Health Care Organizations

Nongovernmental (private)colleges and universities follow FASB standards; governmental (public)colleges and universities should follow GASB standards.

Prepare in general journal form the entries required for each of the following selected transactions of Northern University,a state-funded public institution engaged only in business-type activities.Some of these transactions are related and some are not. 1)A generous alumnus donated $300,000 that can only be used for research on diabetes.The full $300,000 was received in FY 2011. 2)During FY 2011,expenses of $150,000 were made in cash for diabetes research (see item 1 above). 3)$2,000,000 in long-term bonds was issued to construct a new parking garage on campus. 4)During FY 2011,the parking garage (see item 3 above)was partially completed at a total cash expenditure of $1,800,000. 5)During 2011,interest was paid in the amount of $120,000 on the long-term bonds issued for the parking garage project (see item 3 above).

Assets that the governing board of a public university,rather than a donor or other outside agency,has determined are to be retained and invested for future scholarships would be reported as

College summer school revenues of a public university engaged only in business-type activities should be recognized in the fiscal year in which the term is predominantly conducted.

During the years ended June 30,2011 and 2012,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 10,2010,although she paid only $200,000 at that date.The gift was restricted to the financing of this particular research project.During the two-year research period,Jasper's related gift receipts and research expenditures were as follows: How much contribution revenue should Jasper University report for the year ended June 30,2012?

An alumnus donates securities to St.Aloysius College,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

Which of the following is required as part of a complete set of financial statements for a private college or university?

An unrestricted endowment established by the governing board of a public college engaged only in business-type activities is considered a permanent fund and would be reported as unrestricted net assets.

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.

Depreciation of a residence hall should be reported as an expense in a private college's operating statement but might not be reported in the operating statement of a public college engaged only in business-type activities.

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

During the year ended June 30,2011,Hopkins College,a private college,received a federal government grant of $800,000 for research on the role of music in improving math skills for students.Expenses for this research amounted to $100,000 during the same year.Under applicable FASB standards,assuming this is a nonexchange transaction,Hopkins College would report what amount(s)as changes in net assets for the year ended June 30,2011?

State educational appropriations received by a public university are classified as which of the following on the statement of revenues,expenses,and changes in net assets?

Private colleges and universities must provide aggregated entity-wide financial statements prepared in conformity with FASB Statement No.117.Consequently,private colleges and universities no longer utilize fund accounting.

A receipt of a $500,000 gift by a private college which is stipulated by the donor to be used to endow a "chaired" professorship in accounting would be recorded as an increase in temporarily restricted net assets.

Which of the following items would not affect the amounts reported in Revenues and Gains section of the statement of activities for a private college or university?

Contributions or grants restricted by an external donor for a particular operating purpose would be reported as increases to restricted fund balances by a public college or university engaged only in business-type activities and as an addition to temporarily restricted net assets by a private college or university.

Public colleges and universities are considered general purpose governments and are expected to be engaged in governmental activities only for purposes of their stand-alone reports.

The sale of bonds for construction of a college residence hall would always result in a credit to proceeds of bonds in the accounts.

Earnings on endowment investments may increase unrestricted or restricted net assets,or both.