Question 1

In a public university setting,general administration and sponsored research are examples of revenues classified by source.

Accepted Answer

A) True 
 B)False  False

Question 2

Private not-for-profit colleges and universities are subject to the same FASB standards as other not-for-profit entities.

Accepted Answer

A) True 
 B)False  True

Question 3

In accounting for colleges and universities,related entities should either be disclosed in the Notes to the Financial Statements or reported as component entities,depending on the degree of control and economic interest.

Accepted Answer

A) True 
 B)False  True

Question 4

A not-for-profit university operates its college book-store as an auxiliary enterprise.During the year the store has revenues of $30 million and expenses of $27 million.In its statement of activities the university should report

Accepted Answer

A)  Operating revenues of $3 million
B)  Operating revenues of $30 million
C)  Nonoperating revenues of $3 million
D)  Nonoperating revenues of $30 million

Question 5

The single largest source of revenues for not-for-profit universities is tuition and fees.

Accepted Answer

A) True 
 B)False

Question 6

Dormitories and bookstores are examples of auxiliary enterprises business-type activities)engaged in by both private and public universities.

Accepted Answer

A) True 
 B)False

Question 7

During the year,Dakota University's board of trustees established a $500,000 fund to be retained and invested for scholarship grants.The fund earned $30,000,which had not been distributed by December 31.What amount should Dakota report in a board-designated quasi)endowment fund's net position at December 31?

Accepted Answer

A)  $0
B)  $30,000
C)  $500,000
D)  $530,000

Question 8

Under GASB Statement No.39,colleges and universities are required to bring their affiliated medical organizations into their financial reports.

Accepted Answer

A) True 
 B)False

Question 9

Although it no longer is required for external financial reporting,the AICPA's 1973 Audits of Colleges and Universities provides for which of the following in its guidance on fund structure?

Accepted Answer

A)  Plant funds
B)  Loan funds
C)  Annuity funds
D)  All of the above

Question 10

A not-for-profit university maintained as endowment of $800,000,the income of which was restricted for an annual conference on international relations.In a particular year,the market value of the endowment increased by $80,000.The university held a conference on international relations at a cost of $86,000.The university should report

Accepted Answer

A)  No revenue and unrestricted expenses of $86,000
B)  Unrestricted revenues of $80,000 and unrestricted expenses of $86,000
C)  Temporarily restricted revenues of $80,000,temporarily restricted expenses of $80,000 and unrestricted expenses of $6,000
D)  Permanently restricted revenues of $80,000 and unrestricted expenses of $86,000

Question 11

GASB requires that revenues be classified into three categories of restrictiveness based on donor specification.

Accepted Answer

A) True 
 B)False

Question 12

Most colleges and universities classify revenues by source and expenses by function.

Accepted Answer

A) True 
 B)False

Question 13

Investments of a public college must be reported at amortized cost.

Accepted Answer

A) True 
 B)False

Question 14

A public university had tuition and fees for the year ended June 30,2012,in the amount of $27,000,000.Scholarships,for which no services were required,amounted to $2,100,000.Graduate assistantships,for which services were required,amounted to $1,950,000.The amount to be reported by the university as net tuition and fee revenue would be

Accepted Answer

A)  $27,000,000
B)  $25,050,000
C)  $24,900,000
D)  $22,950,000

Question 15

In the current year,Generous University awarded scholarships to graduate students in the amount of $5,000,000.The recipients are not required to provide any services in return for the scholarships.How should the university record the award? a)
$\begin{array}{lll}
  \text {Scholarship expense  } & \$ 5,000,000 \
 \text {  Accounts payable} &&\$ 5,000,000\
\end{array}$

b)
$\begin{array}{lll}
  \text { Tuition deductions-unrestricted }\
  \text {  student aid } & \$ 5,000,000 \
 \text { Accounts receivable } &&\$ 5,000,000\
\end{array}$

c)
$\begin{array}{lll}
  \text { Scholarship expense } & \$ 5,000,000 \
 \text { Accounts receivable } &&\$ 5,000,000\
\end{array}$

d)
$\begin{array}{lll}
  \text { Tuition deductions - unrestricted }\
  \text {   student aid} & \$ 5,000,000 \
 \text { Accounts payable } &&\$ 5,000,000\
\end{array}$

Accepted Answer

The answer of In the current year,Generous University awarded scholarships...

Question 16

Which of the following criteria must be met for a public university to report affiliated organizations as component units? I.The university is entitled to access the resources
II)The economic resources are significant to the component
III)The economic resources received or held are almost entirely for the direct benefit of the university

Accepted Answer

A)  I only
B)  III only
C)  I and III
D)  All three criteria

Question 17

Declines in the stock market can affect the fiscal health of colleges and universities.Which of the following is the least likely reason for that?

Accepted Answer

A)  Reduction in endowment income.
B)  Decrease in demand for university scholarship funds.
C)  Reduced ability of parents and students to pay tuition.
D)  Decrease in donors' willingness and ability to make contributions.

Question 18

When a semester starts and ends in different fiscal years,FASB standards require not-for-profit colleges to apportion tuition and fees between the two years.

Accepted Answer

A) True 
 B)False

Question 19

Private colleges and universities should account for all grants on the accrual basis as exchange transactions.

Accepted Answer

A) True 
 B)False

Question 20

Financial statements for Smith College,a church-supported college,should be prepared according to standards set by

Accepted Answer

A)  AICPA.
B)  FASB.
C)  GASB.
D)  Smith may choose any of the above.

Exam 13: Colleges and Universities

In a public university setting,general administration and sponsored research are examples of revenues classified by source.

Private not-for-profit colleges and universities are subject to the same FASB standards as other not-for-profit entities.

In accounting for colleges and universities,related entities should either be disclosed in the Notes to the Financial Statements or reported as component entities,depending on the degree of control and economic interest.

A not-for-profit university operates its college book-store as an auxiliary enterprise.During the year the store has revenues of $30 million and expenses of $27 million.In its statement of activities the university should report

The single largest source of revenues for not-for-profit universities is tuition and fees.

Dormitories and bookstores are examples of auxiliary enterprises business-type activities)engaged in by both private and public universities.

Under GASB Statement No.39,colleges and universities are required to bring their affiliated medical organizations into their financial reports.

Although it no longer is required for external financial reporting,the AICPA's 1973 Audits of Colleges and Universities provides for which of the following in its guidance on fund structure?

GASB requires that revenues be classified into three categories of restrictiveness based on donor specification.

Most colleges and universities classify revenues by source and expenses by function.

Investments of a public college must be reported at amortized cost.

Declines in the stock market can affect the fiscal health of colleges and universities.Which of the following is the least likely reason for that?

When a semester starts and ends in different fiscal years,FASB standards require not-for-profit colleges to apportion tuition and fees between the two years.

Private colleges and universities should account for all grants on the accrual basis as exchange transactions.

Financial statements for Smith College,a church-supported college,should be prepared according to standards set by