ACCT 506 Chapter 15 – Flashcards

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

Under GASB standards, public colleges and universities are considered general purpose governments.

The accrual basis of accounting is used to record revenues and expenses of both public business-type and private colleges and universities.

A private college would record a federal grant received to test a medical device that the federal government intends to patent as Contributions-Temporarily Restricted.

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.

Tuition refunds are recorded by debiting Tuition and Fees-Unrestricted.

A private university following the recommendations of the National Association of College and University Business Officers (NACUBO) chart of accounts for reporting expenses, must disclose expenses by program and support function in the notes.

Assets set aside for an endowment by a university governing board would be reported as unrestricted.

Earnings on a private college's endowment investments may increase unrestricted or temporarily restricted net assets, or both.

Receipt of a $500,000 gift by a private college that must be invested, the earning of which are to be used to support a "chaired" professorship in accounting, would be recorded as an increase in temporarily restricted net assets.

An annuity agreement requires that a college pay the donor (or other designated individual) a fixed dollar amount at specified time intervals.

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.

Private colleges and universities report term endowments as permanently restricted net assets until the term has expired.

Public colleges and universities that use business-type reporting must present segment information in the notes to the financial statements.

The Uniform Prudent Management of Institutional Funds Act (UPMIFA) applies primarily to colleges and universities.

The organizational form of a college can be governmental, nongovernmental not-for-profit, or for-profit.

The National Association of College and University Business Officers (NACUBO) provides second-tier GAAP for private colleges and universities.

Loan assets represent loans made by a university to an external organization, and would be recorded by debiting Investments.

Private colleges report intangible assets as a separate asset classification; whereas, public colleges report intangible assets as part of the capital asset classification.

Both public and private universities report an infrastructure classification.

Colleges and universities will report tuition waivers as either a contra-revenue account or an expense, depending on the purpose for which the waiver is given.

A split-interest agreement is when the university and another beneficiary share in the benefits from a donor's gift.

The Uniform Prudent Management of Institutional Funds Act specifies the spending rate a not-for-profit should use when establishing its expenditure policies.

Only public colleges and universities are subject to the federal single audit requirements.

The federal government is considering a national ranking system in which colleges and universities would be ranked on affordability, among other factors.

An example of a college outcome performance metric would be performance on nationally ranked exams such as the CPA exam.

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.

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.

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.Permit public colleges and universities to optionally follow FASB standards.

A private college would report which of the following assets differently than a public college? A. Land. B. Intangible assets. C. Collections. D. Equipment.

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. Unrestricted net assets. B. Temporarily restricted net assets. C. Permanently restricted net assets. D. Unrestricted designated net assets.

Which of the following receipts may properly be accounted for as an increase in unrestricted net assets 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.

Economic rationality would argue against a university accepting 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.

The FASB requires that private colleges and universities prepare which of the following financial statements? A. A statement of functional expenses. 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.

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.

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.

Which of the following is required as part of a complete set of financial statements for a private college or university? A. Statement of changes in operations. B. Statement of revenues, expenses, and changes in net assets. C. Statement of activities. D. Statement of functional expenses.

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.

Which of the following statements usually will not be included in the annual financial report of 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.

Tuition scholarships for which there is no intention of collection from the student should be classified by a private university as A. Reductions of gross revenue to arrive at net revenue. B. Revenues and expenditures. C. Revenues and expenses. D. Reductions of gross revenue or as expenses provided they are consistently classified in the same manner from year to year.

An 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. Unrestricted net assets. C. Permanently restricted net assets. D. Temporarily restricted net assets.

How would estimated uncollectible tuition and fees be reported on the financial statements of a university? A. It would be reported as part of net revenue by a public university. B. It would be reported as an operating expense by a public university. C. It would be reported as an operating expense by a private university. D. Both A and C are correct methods of reporting estimated uncollectible tuition and fees.

Which 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. Federal appropriations. C. Investment income. D. Private gifts.

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.

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.

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. Current ratio. C. Faculty productivity. D. Graduation rate.

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.

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.

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.

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 the provisions of the 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.