question

Public

answer

*GASB* Larger proportion of revenues from STATE APPROPRIATIONS and RESEARCH GRANTS

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Private

answer

*FASB* Larger proportion of revenues from TUITION, PRIVATE CONTRIBS. and RESEARCH GRANTS

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Financial Statements for a *Public C&U*

answer

*Statement of net position*, classifying net assets into: - Net investment in capital assets - Restricted - Unrestricted *Statement of revenues, expenses and changes in net assets* (Income Statement) *Statement of Cash Flows*

question

Financial Statements for a *Private C&U*

answer

*Statement of Financial Position* classifying *net assets* into: - *Unrestricted* - *Temporarily restricted* - *Permanently restricted* *Statement of Activities* (Income Statement) *Statement of Cash Flows*

question

Colleges and Universities look to which *standard-setting body for GAAP*?

answer

It depends on whether the entity is public, private, or for-profit

question

Which of the following statements is *prepared by both a private and a public college or university*

answer

*Statement of Cash Flows*

question

*A University expended $2,475,000 on a new parking facility*. The transaction was reported as an *investing activity* on its *direct method statement of cash flows*. What type of university prepared the statement of cash flows?

answer

A *For-profit University* or A *Private University*

question

Last Year Zelnick College showed a positive revenue over expenses number for the first time in several years. The oleo is funded with contributions, grants, *two government appropriations (state and local), and tuition and fees. Zelnick College is most likely what type of college?

answer

*A Public University engaged primarily in business-type activities*

question

Gresham college is a *local private college* When reviewing the college's financial repots, you would expect to see which of the following categories on its statement of assets and liabilities? (Balance Sheet)

answer

*Unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets*

question

*Loan Assets*

answer

Assets that are loanable to students, faculty and staff of an educational institution are provided by *gifts, grants, income from endowments,* and in some cases, loans. *Recording of these transactions is the same under GASB and FASB Standards* with the *exception of recording restrictions*

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*Recording Restrictions on Laon Assets*

answer

Cash Contribs. to be used for student loans: *Public*: Restricted Net Position *Private*: Temporarily Restricted Net Position *Board* designates cash for loans to students: *Public*: *Unrestricted, designated net position* *Private*: Unrestricted, designated net assets* Note: the Board is NOT AN EXTERNAL PARTY --> Internal Restrictions Loan of cash is made to the university to be use for loans to students (i.e. Banks): *Public*: Recorded as a *liability* *Private*: Recorded as a *liability*

question

*Capital Assets*

answer

The recording & reporting of capital assets by C&U is *similar under FASB and GASB Standards*. Accounting and reporting guidelines *differ when considering intangible assets and infrastructure assets* FASB has no rule regarding intangible and infrastructure GASB records within capital asset category

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*Intangible Assets*

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GASB: Report as a classification within *capital Assets* FASB: Report as a *separate classification, usually below PP&E (capital assets)

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*Infrastructure Assets*

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GASB: *Infrastructure is reported as a separate classification. Modified approach may be used to report at reporting dates after acquisition.* FASB: *No Separate classification for infrastructure* Assets similar to infrastructure could be reported as *land improvements*

question

Assets - Collections

answer

Collections held by museums and libraries of C&S *do not have to be recognized as assets* (and consequently depreciated) if they are: * - Held for public exhibition - Protected and preserved - Subject to a policy that requires proceeds from sales to be used to acquire other similar assets*

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*Liabilities*

answer

A *short-term liability* that may appear on C&U statements is *Deposits Held in Custody for Others*. This account is used to *record events such as students making cash deposits for housing, equipment, or services*. Accounting for these transactions is the *same under either GASB or FASB*. If the C or U is *obligated to return some or all of the despot at a future date*, it should be accounted for as a *liability* When the *deposits are returned*, the *liability would be debited* and *cash would be credited* When an *outstanding charge exists*, the University would *credit outstanding receivable for the amount owed and any cash remaining from the deposit, minus any adjustments for charges* such as rent or damages

question

Net Assets or Net Position

answer

*FASB - Net ASSETS* - Unrestricted - Temporarily Restricted Permanently Restricted *GASB - Net Position* - Unrestricted - Restricted - Net Investment in Capital Asset

question

Operating Statements

answer

FASB: *Single Step or Multiple Step Format* --> *Net Assets Released from Purpose or Time Restrictions* GASB: *Separately report operating and non operating activity* --> *Statement of revenues, expenses and changes in net position*

question

Revenue Classifications

answer

*Tuition and fees* Federal, *state* and local *appropriations* *Private Gifts* *Grants* and contracts Investment Income Sales and services of educational activities Sales and services of auxiliary activities Other Sources

question

Revenues - *Tuitions & Fees*

answer

Both *FASB and GASB* require that *gross tuition & fees* be recorded as *revenue* even though some of the *revenue will be offset by tuition waivers, scholarships & fellowships* (Discount and allowance accounts are used to recoup. offsets to tuitions & fees) *Tuition refunds are charged* directly against the *Tuition & Fees revenue account* *Tuition waivers* received as part of compensation should be recored as *compensation expense* rather than a *contra-revenue account* (Tuition waiver for a TA would be recorded as an instructional expense)

question

Other Tuition Related Issues

answer

Universities: Revenue is earned as you take your coruses. Once course completed: Revenue is earned

question

Uncollectible Tuition and Fees

answer

*FASB*: Private C&U should show tuition an fees net of any set. uncollectible amts. *directly adjusting the revenue account for the estimate* *GASB*: Public C&U use a *contra revenue account* (not an expense account) such as Provision for Bad Debts

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*Contributions*

answer

*FASB*: Recognize contributions and promises to give as *income in the period in which the contributions are made*. Report *Increases as either unrestricted, temporarily restricted, or permanently restricted net assets*, depending on the stipulation of the donor. Estimated for uncollectible pledges must be made *GASB*: Recognize contributions as revenue when *all eligibility requirements and time restrictions have been met* Eligibility requirements relate to: *Characteristics of recipients, reimbursable costs incurred. Ability to meet sated contingency.* Uncollectible promises must be estimated.

question

Grants and Awards

answer

The terms of an individual grants & awards must be examined to determine appropriate accounting and reporting procedures. If the resource *provider directly benefits by receiving something of value through he transaction*, the transaction is an *exchange transaction* - results in an *increase in unrestricted net assets/position* Otherwise, it should be recorded as a nonexchainge transaction - recorded as *contributions*

question

Expenses

answer

Recored on the *accrual basis* for both Private and Public C&U Expenses are generally classified on a *functional basis* by both private and public educational institutions To be in compliance with FASB standards. Private C&U need to *disclose program and support expenses* in the notes to of the financial statements if not included on the face of the statement

question

Statement of Cash Flows

answer

*FASB*: May use *direct or indirect methods* * - Operating - Investing - Financing* *GASB*: *Requires use of DIRECT METHOD* *- Operating - Noncapital Financing - Capital and related financing*

question

*Patents* are classified as capital assets

answer

GASB (reported separately)

question

*Sidewalks* are classified as *land improvements*

answer

FASB (infrastructure)

question

*Revenues* and *expenses* must be categorized as *operating and non-operating*

answer

GASB

question

*Tuition and Fees* must be shown net of any *estimated uncollectible amounts*

answer

FASB and GASB

question

Expenses must be reported by program and support (management and general, and fund-rasigin) function classifications

answer

FASB

question

Statement of cash flows must be prepared using the *direct method*

answer

GASB (FASB allows both)

question

The purchase of a *building* is reported as an *investing activity* on the statement of cash flows

answer

FASB (Capital Asset)

question

The receipt of a student deposits for housing is reported as a *liability, Deposits Held in Custody for Others.*

answer

FASB and GASB

question

The cash from a debt issuance is reported in the *capital and related financing* on the statement of cash flows

answer

GASB

question

The *collection of historical first editions* can be reported as a *note* rather than on the face of the financial statement provided *certain conditions are met*

answer

FASB and GASB (Collections)

question

Endowments

answer

The donor has stipulated that the principle of his/her gift is not expendable as of the reporting ate. However, the gift can be invested of rote purpose of producing income. *Permanent* - the principle must remain intact for perpetuity: - Permanently restricted net assets: *PRIVATE* - Restricted nonexpendable net position: *PUBLIC* *Term* - the principle remains intact for a period to time - Identified as Restricted: *PRIVATE* - Identified as Restricted: *Public* Under a *total return* investment objective changes in FV of the portfolio and income are considered part of the return of the investment portfolio. *Spending rate* is the proportion of total return that may prudently be used by an institution for current purposes 2 Indcators to gauge *Effecitvness of endowment management*

question

Split Interest Agreements

answer

Not Common Earnings couldd be split between university and donors

question

UPMIFA

answer

Act to manage endowment. University manage endowment prudently.

question

Performance Measures

answer

*Output* indiators: passing rate, Male to Female ratio, enrollment, hire in first year, graduation rate OutcomeS: increased knowledge of students, satisfaction of alumni, value added to students in the areas of skills and knowledge

question

Which of the following is a true statement about *tuition revenue in a college or university*?

answer

*Refunds* should be reported as *deductions from gross revenue*.

question

How would a university account for *funds received from an external donor* that are to be *retained and invested*, with the related earnings *restricted to the purchase of library books*?

answer

*Nonspendable, endowment ina public university.* (Endowment is permanently restricted even though earnings are temporarily restricted )

question

Which of the wallowing statements is *incorrect* concerning the financial reports of the C&U

answer

a. The NACUBO account titles are frequently used for reporting revenues and expenses by both private and public entities *b. State appropriations are reported as non operating revenues by public entities* c. Intangible assets are reported as a classfiatrion within capital assets by private entities d. Conditional contributions are not recognized by public of private entities

question

Many endowment management policies establish a *spending rate* for the college or university's *endowment funds*. A *spending rate* is best defined as:

answer

*The portion of the total return that can currently be used to carry out the endowment purpose*

question

Which of the wfollwoing is a performance measure of an outcome?

answer

A state survey of employers showed that 70% of employers ranked Basely State University's graduates as *"very well prepared" to enter the workforce*

Chapter 15: Accounting for Colleges and Universities – Flashcards

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