ACCT 401 Test #5 (#4)

Which of the following statements is true regarding generally accepted accounting principles (GAAP) for colleges and universities?
A) The FASB has set standards for private and public colleges and universities from the time of its inception in 1974.
B) The National Association of Colleges and University Business Officers (NACUBO) provides category (b) accounting principles under the FASB GAAP hierarchy.
C) Public and private colleges and universities are subject to the requirements in the AICPA audit and accounting guide for Not-for-Profit Entities.
D) The GASB is responsible for establishing GAAP for public colleges and universities.
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Which of the following statements is true regarding generally accepted accounting principles (GAAP) for colleges and universities?
A) The FASB has set standards for private and public colleges and universities from the time of its inception in 1974.
B) The National Association of Colleges and University Business Officers (NACUBO) provides category (b) accounting principles under the FASB GAAP hierarchy.
C) Public and private colleges and universities are subject to the requirements in the AICPA audit and accounting guide for Not-for-Profit Entities.
D) The GASB is responsible for establishing GAAP for public colleges and universities.
D) The GASB is responsible for establishing GAAP for public colleges and universities.
What type of college or university must report expenses by functional classification?
A) Both private and public colleges and universities.
B) Private colleges and universities.
C) Public colleges and universities.
D) Neither private nor public colleges and universities.
B) Private colleges and universities.
GASB accounting and reporting standards applicable to public colleges and universities:
A) Are now the same as FASB standards to permit comparability between public and private colleges and universities.
B) Permit public colleges and universities to use the AICPA model which differs substantially from the reporting model used by private colleges and universities subject to FASB jurisdiction.
C) Permit public colleges and universities to optionally follow FASB standards.
D) Differ in some significant ways from FASB standards applicable to private colleges and universities.
D) Differ in some significant ways from FASB standards applicable to private colleges and universities.
A private college would report which of the following assets differently than a public college?
A) Land.
B) Intangible assets.
C) Collections.
D) Equipment.
B) Intangible assets.
Cactus College, a small private college, received a research grant from NACUBO to study whether service efforts and accomplishments measures improve institutional performance. In accordance with FASB standards the grant would be reported as an increase in:
A) Net assets without donor restrictions.
B) Net assets with donor restrictions.
C) Deferred revenue.
D) Board-designated net assets.
B) Net assets with donor restrictions.
Which of the following receipts may properly be accounted for as an increase in net assets without donor restrictions by a private college?
A) Student tuition and fees.
B) Gift from an alumnus for a new college of business building.
C) Federal grant for genetic research.
D) Acceptance of assets, the income from which will be paid to the donor.
A) Student tuition and fees.
It would not make economic sense for a university to accept a split-interest agreement in which a fixed annuity is payable to the donor if:
A) The donor has attached conditions to the gift.
B) The university has no immediate need for the assets.
C) The sum of future annuity payments plus interest thereon exceeds the fair market value of the assets.
D) The present value of the future annuity payments and other liabilities exceed the fair market value of the assets.
D) The present value of the future annuity payments and other liabilities exceed the fair market value of the assets.
The FASB requires that private colleges and universities prepare which of the following financial statements?
A) A statement of net position.
B) A statement of net changes in financial position.
C) A statement of activities.
D) The FASB requires private colleges and universities to prepare all of the above statements.
C) A statement of activities.
Which of the following items would not affect the amounts reported in the Revenues and Gains section of the statement of activities for a private college or university?
A) Student tuition and fees.
B) Tuition and fees discounts and allowances.
C) Net assets released from restriction.
D) Deferred revenues.
D) Deferred revenues.
A college has collected returnable dormitory room deposits from students. How would these deposits be reported by the college?
A) A current liability.
B) Unrestricted revenue.
C) Restricted revenue.
D) A long-term liability.
A) A current liability.
Which of the following is required as part of a complete set of financial statements for a public college or university engaged only in business-type activities? A) Statement of changes in operations. B) Statement of revenues, expenses, and changes in net position. C) Statement of activities. D) Statement of functional expenses.B) Statement of revenues, expenses, and changes in net position.Colleges and universities often make loans to students. How would these loans be reported on the financial statements? A) An expense. B) A receivable. C) A liability. D) An investment.B) A receivable.Which of the following statements is required for both a private university and a governmentally owned public university engaged only in business-type activities? A) Statement of cash flows. B) Statement of net position. C) Statement of activities. D) Statement of revenues, expenses, and changes in net position.C) Statement of activities.Tuition scholarships for which there is no intention of performance from the student should be classified by a private university as A) Reductions of gross revenue to arrive at net revenue. B) Not recognized in the financial statement. C) Increases in expenditures. D) Reductions of gross revenue or as expenses provided they are consistently classified in the same manner from year to year.A) Reductions of gross revenue to arrive at net revenue.Culver City College, a public college, has a 10-week summer session that starts on June 25, 2020, so that one week is held during FY 2020 and the other nine weeks meet during FY 2021. Tuition and fees in the amount of $1,000,000 were collected from students for classes to be conducted in this session. What amount should Culver City College recognize as unrestricted revenue in each of the years ended (FYE) June 30, 2020 and June 30, 2021? FYE 2020 FYE 2021 A. $ 100,000 $ 900,000 B. $ 0 $ 1,000,000 C. $ 1,000,000 $ 0 D. $ 500,000 $ 500,000A. $ 100,000 $ 900,000An alumnus donates securities to 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: A) Endowments. B) Net assets without donor restrictions. C) Deferred revenue. D) Net assets with donor restrictions.D) Net assets with donor restrictions.During the years ended June 30, 2020 and 2021, 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, 2019. The gift was restricted to the financing of this particular research project. During the two-year research period, Jackson's gift receipts from the alumnus and research expenses related to the research project were as follows for each fiscal year (FY): FY 2020 FY 2021 Gift receipts $ 200,000 $ 800,000 Cancer research expenses $ 100,000 $ 900,000 What amount of net assets was released from restriction in 2020? A) $200,000. B) $100,000. C) $1,000,000. D) $0.B) $100,000.During the years ended June 30, 2020 and 2021, 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, 2019. The gift was restricted to the financing of this particular research project. During the two-year research period, Jackson's gift receipts from the alumnus and research expenses related to the research project were as follows for each fiscal year (FY): FY 2020 FY 2021 Gift receipts $ 200,000 $ 800,000 Cancer research expenses $ 100,000 $ 900,000 How much had net assets with donor restrictions increased as of the end of FY 2021? A) $1,000,000. B) $100,000. C) $(100,000). D) $0.D) $0.How would estimated uncollectible tuition and fees be reported on the financial statements of a university? I. It would be reported as part of net revenue by a public university. II. It would be reported as an operating expense by a public university. III. It would be reported as an operating expense by a private university. A) I only. B) II only. C) III only. D) Both I and III are correct methods of reporting estimated uncollectible tuition and fees.A) I only.During the year ended June 30, 2020, 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 that were not capital in nature for this research amounted to $100,000 during the same year. Under FASB standards, which of the following best represents how Hopkins College would report this nonexchange transaction in the net assets section for the year ended June 30, 2020? Without Donor Restrictions With Donor Restrictions A. $ 0 $ 800,000 B. $ 0 $ 700,000 C. $ 100,000 $ 700,000 D. $ 800,000 $ 0 A) Choice A. B) Choice B C) Choice C. D) Choice D.B) Choice B $0 $700,000Which of the following is not a classification of revenues for a college or university as recommended by the National Association of College and University Business Officers (NACUBO)? A) Sporting events. B) State appropriations. C) Investment income. D) Contributions.A) Sporting events.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 position? A) Nonoperating revenue. B) Operating revenue. C) Other financing source. D) Increase in unrestricted net position.A) Nonoperating revenue.Which of the following is a typical classification of a functional expense in a college or university? A) Academic wages and benefits. B) Student support. C) Institutional support. D) Depreciation.C) Institutional support.Which of the following measures may be useful to decision makers evaluating the financial condition of a college or university? A) Number of graduates. B) Composite financial index. C) Faculty productivity. D) Graduation rate.B) Composite financial index.Which of the following statements about the Uniform Prudent Management of Institutional Funds Act (UPMIFA) is correct? A) It establishes a maximum total return rate for investments. B) It requires that the spending rate for the return on investments be no more than five percent. C) It allows institutions to release net assets from restrictions if certain criteria are met. D) It requires that specific policies concerning solicitation of donations be established.C) It allows institutions to release net assets from restrictions if certain criteria are met.The Academy, a private college, provided tuition waivers of $500,000. Of the amount $200,000 was for students teaching courses as graduate assistants and $300,000 was simply an award for scholastic accomplishments. Another $100,000 was given is tuition refunds. What amount would The Academy record as Tuition and Fees Discounts and Allowances? A) $600,000. B) $500,000. C) $400,000. D) $300,000.D) $300,000.How would a private college or university report its estimate for uncollectible tuition and fees on its statement of activities? A) A contra-revenue account titled Provision for Doubtful Accounts. B) A direct reduction of Tuition and Fees—Unrestricted. C) An operating expense titled Provision for Doubtful Accounts. D) An operating expense titled Bad Debt Expense.B) A direct reduction of Tuition and Fees—Unrestricted.Which of the following statements concerning the audits of colleges and universities is true? A) Both public and private colleges and universities are subject to a single audit if they expend over $750,000 in federal funds in a fiscal year. B) The nongovernmental nature of public colleges and universities means they are exempt from the requirements of the single audit, but they are required to have an audit conducted under generally accepted auditing standards. C) Public colleges and universities are exempt from the requirements of the single audit, but they are required to follow the Uniform Guidance to ensure only allowable costs are charged to federal grants. D) Both public and private colleges and universities are exempt from the requirements of the single audit, but they are both required to follow the Uniform Guidance to ensure only allowable costs are charged to federal grants.A) Both public and private colleges and universities are subject to a single audit if they expend over $750,000 in federal funds in a fiscal year.The composite financial index (CFI), a measure of financial health for colleges and universities, includes which of the following ratios? A) Primary reserve ratio. B) Net operating revenues ratio. C) Return on net assets ratio. D) All of these ratios are included in the CFI.D) All of these ratios are included in the CFI.Definition: Agreements to pay the donor the income earned by assets donated to an organization over the specified beneficiary's lifetime Term Options: A. Term endowments B. Annuity agreements C. Collections D. Pooled life income agreements E. Spending rate F. Total returnD. Pooled life income agreementsDefinition: A comprehensive measure of the rate of investment return, which includes unrealized and realized gains and losses, as well as interest and dividend income Term Options: A. Term endowments B. Annuity agreements C. Collections D. Pooled life income agreements E. Spending rate F. Total returnF. Total returnDefinition: A contribution that must be retained intact until the happening of a specific event or the passage of a stated period of time Term Options: A. Term endowments B. Annuity agreements C. Collections D. Pooled life income agreements E. Spending rate F. Total returnA. Term endowmentsDefinition: The proportion of total return that may prudently be used by an institution for current purposes Term Options: A. Term endowments B. Annuity agreements C. Collections D. Pooled life income agreements E. Spending rate F. Total returnE. Spending rateDefinition: Agreement to pay stipulated amounts periodically to the donor of assets by the recipient organization Term Options: A. Term endowments B. Annuity agreements C. Collections D. Pooled life income agreements E. Spending rate F. Total returnB. Annuity agreements