Question 1

A Research grant program is a split-interest agreement.

Accepted Answer

A) True 
 B)False

Question 2

On January 1,2012,Antioch College,a private not-for-profit college,received $6,000,000 in cash to purchase an electron microscope.The microscope was delivered on July 1,2012 and payment was made.The microscope is expected to last 5 years and has no salvage value at the end of that time.The fiscal year end is December 31.
(a)Record the journal entries required on January 1,July 1,and December 31,2012 to record the receipt of the cash,the purchase of equipment,and one half year's depreciation,assuming the plant assets are recorded as unrestricted assets at the time of purchase.
(b)Record the journal entries required on January 1,July 1,and December 31,2012 to record the receipt of the cash,the purchase of equipment,and one half year's depreciation,assuming the plant assets are recorded as temporarily restricted assets at the time of purchase.

Accepted Answer

The answer of On January 1,2012,Antioch College,a private not-for-profit college,received...

Question 3

With respect to private colleges and universities,why are quasi-endowments not classified as permanently restricted net assets while true endowments are?

Accepted Answer

The answer of With respect to private colleges and universities,why...

Question 4

Distinguish between
(a)true endowments,
(b)term endowments,and
(c)quasi-endowments.Explain how the net assets of each is classified by a private college or university.

Accepted Answer

The answer of Distinguish between
(a)true endowments,
(b)term endowments,and
(c)quasi-endowments.Explain how the net...

Question 5

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

Accepted Answer

A)  Four categories are used: Operating, Capital Related Financing, Non-capital Related Financing, and Investing. 
B)  Either the direct or indirect method is acceptable. 
C)  Cash flows must be presented separately for Unrestricted, Temporarily Restricted, and Permanently Restricted categories. 
D)  All of the above are true.

Question 6

Universities treat athletic scholarships as a reduction in revenue.

Accepted Answer

A) True 
 B)False

Question 7

How does a private college or university treat an academic scholarship?

Accepted Answer

A)  Reduction to revenue. 
B)  Expense. 
C)  No reduction of revenue or expense is recognized. 
D)  Increase to revenue.

Question 8

Which of the following is true of a Statement of Activities prepared for a private college or university?

Accepted Answer

A)  All expenses are shown as unrestricted. 
B)  Reclassifications from unrestricted to permanently restricted net assets are reported when the governing board designates unrestricted funds for permanent investment in the endowment. 
C)  Only realized gains or losses on investments are reported. 
D)  All of the above are true.

Question 9

In 2011 a faculty member at a private college received a grant from the National Science Foundation to conduct basic research on tree frogs in the amount of $400,000.Expenses associated with the grant totaled $390,000 in 2012.In the Statement of Activities for 2012,the college should show:

Accepted Answer

A)  Revenues of $400,000 and expenses of $390,000 in Temporarily Restricted Net Assets. 
B)  Revenues of $390,000 and expenses of $390,000 in Temporarily Restricted Net Assets. 
C)  Revenues of $390,000 and expenses of $390,000 in Unrestricted Net Assets. 
D)  Expenses of $390,000 in Unrestricted Net Assets and a decrease in Temporarily Restricted Net Assets of $390,000.

Question 10

Private,Not-for-profit Colleges and Universities and Investor-owned Schools follow FASB standards and adhere to the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 11

Ballard University,a private not-for-profit,billed four students for tuition and fees each in the amount of $8,450 each for fall semester.The University estimates 20% of tuition and fees will prove to be uncollectible.The University collected $9,422 as follows:
  Required:
 Prepare the journal entries to record the billing and subsequent collection or write-off for the transactions listed above.

Accepted Answer

The answer of Ballard University,a private not-for-profit,billed four students for...

Question 12

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,if an institution decides not to capitalize museum and other inexhaustible collections,note disclosures are required regarding the collections.

Accepted Answer

A) True 
 B)False

Question 13

Ethan Allen University is a private university following FASB standards for reporting.The following transactions took place during the year ended June 30,2012.
(1)EAU had received $600,000 in tuition in June 2012 for the summer session that runs from
June 16 to August 14,2011 and had deferred $450,000 (75%)at June 30,2011.
(2)EAU received in cash tuition of $3,320,000; unrestricted contributions of $320,000;
contributions permanently restricted by donor agreement for the endowment of $805,000,
unrestricted interest income on endowments of $250,000; and auxiliary enterprise revenue of
$2,500,000.
(3)Contributions for student scholarships were received in the amount of $430,000.$360,000
was awarded to students during the year.Students receiving these scholarships are required to
work 10 hours a week (institutional support).
(4)Expenses amounted to $1,400,000 for instruction,$800,000 for research,$600,000 for
public service,$2,000,000 for auxiliary enterprises,$300,000 for student services,and
$890,000 for institutional support.Included in these amounts is $460,000 of depreciation.All
other expenses ($5,530,000)were paid in cash.Plant assets are classified as unrestricted.
(5)EAU received $580,000 in tuition in mid June 2012 for the summer session ending in mid
August 2012.
(6)At year-end,endowment investments were determined to have a fair value of $50,000 in
excess of their recorded amounts.No restrictions apply to this income.
Required:
(a)Prepare journal entries to record these events including closing entries.
(b)Prepare a Statement of Unrestricted Revenues,Expenses and Other Changes in
Unrestricted Net Assets.
(c)Prepare a Statement of Activities for the year ending June 30,2012,assuming the June 30,
2011 balances in net assets are:
 $2,050,000 unrestricted,$830,000 temporarily restricted,and
$4,000,000 permanently restricted.

Accepted Answer

The answer of Ethan Allen University is a private university...

Question 14

Universities treat athletic scholarships as an expense to the athletic department who must pay for the scholarship out of its net revenues.

Accepted Answer

A) True 
 B)False

Question 15

A tuition waiver for a student who works as a graduate assistant is treated as compensation expense.

Accepted Answer

A) True 
 B)False

Question 16

With respect to colleges and universities,if a tuition or fee reduction is an employee benefit it should be treated as a compensation expense,rather than a discount.

Accepted Answer

A) True 
 B)False

Question 17

A donor gave a gift of $40,000 cash to a private college in 2011 with instructions that the funds be expended for psychology research.The funds were expended in 2012.The private college would recognize the $40,000 as:

Accepted Answer

A)  Deferred revenue in 2011 and as revenue in 2012, increasing unrestricted net assets. The expense would be recognized in 2012. 
B)  Deferred revenue in 2011 and as revenue in 2012, increasing temporarily restricted net assets. The expense would be recognized also in 2012, and the resources would be reclassified from temporarily restricted net assets to unrestricted net assets in 2012. 
C)  Either (b) or (c), depending upon the policy of the private college. 
D)  Revenue in 2011 increasing temporarily restricted net assets; recognize the expense in 2012, and reclassify the resources from temporarily restricted net assets to unrestricted net assets in 2012.

Question 18

The NACUBO Financial Accounting and Reporting Manual treats estimates of uncollectible student accounts as:

Accepted Answer

A)  Bad debt expense. 
B)  Reduction in revenue. 
C)  Other financing uses. 
D)  None of the above.

Question 19

Public universities follow the authoritative standards of _____ and the _____ basis of accounting.

Accepted Answer

A)  FASB, Accrual. 
B)  FASB, Modified-accrual. 
C)  GASB, Accrual. 
D)  GASB, Modified-accrual.

Question 20

Under NACUBO guidelines,tuition waivers associated with student work study programs should be reported as:

Accepted Answer

A)  Expenses. 
B)  Reductions in revenue. 
C)  Transfers. 
D)  None of the above.

Exam 11: College and University Accounting

A Research grant program is a split-interest agreement.

With respect to private colleges and universities,why are quasi-endowments not classified as permanently restricted net assets while true endowments are?

Distinguish between (a)true endowments, (b)term endowments,and (c)quasi-endowments.Explain how the net assets of each is classified by a private college or university.

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

Universities treat athletic scholarships as a reduction in revenue.

How does a private college or university treat an academic scholarship?

Which of the following is true of a Statement of Activities prepared for a private college or university?

In 2011 a faculty member at a private college received a grant from the National Science Foundation to conduct basic research on tree frogs in the amount of $400,000.Expenses associated with the grant totaled $390,000 in 2012.In the Statement of Activities for 2012,the college should show:

Private,Not-for-profit Colleges and Universities and Investor-owned Schools follow FASB standards and adhere to the accrual basis of accounting.

According to the rules for accounting for colleges and universities under the jurisdiction of the FASB,if an institution decides not to capitalize museum and other inexhaustible collections,note disclosures are required regarding the collections.

Universities treat athletic scholarships as an expense to the athletic department who must pay for the scholarship out of its net revenues.

A tuition waiver for a student who works as a graduate assistant is treated as compensation expense.

With respect to colleges and universities,if a tuition or fee reduction is an employee benefit it should be treated as a compensation expense,rather than a discount.

A donor gave a gift of $40,000 cash to a private college in 2011 with instructions that the funds be expended for psychology research.The funds were expended in 2012.The private college would recognize the $40,000 as:

The NACUBO Financial Accounting and Reporting Manual treats estimates of uncollectible student accounts as:

Public universities follow the authoritative standards of _ and the _ basis of accounting.

Under NACUBO guidelines,tuition waivers associated with student work study programs should be reported as: