Exam 11: College and University Accounting

Tuition and fees for Northern University were assessed at $22,000,000. $ 1,600,000 of the amount due from students was later reduced by need based scholarships. Graduate assistantships and work-study stipends reduced the amounts collectible from student by an additional $ 1,000,000. -What is the journal entry to record the scholarship allowances?

Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college?

Private colleges and universities are primarily) subject to financial reporting standards issued by?

Indicate the contents required for a financial report for those public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities.

Cash paid for equipment is classified as an Investing activity in the Statement of Cash Flows for a public university.

Which of the following is a required statement for a private college?

Private colleges and universities are required to present a Statement of Cash Flows using the direct method.

Public colleges and universities are required to report net position within the categories of unrestricted, temporarily restricted and permanently restricted.

Private colleges and universities record contributed services as revenue if the services create or enhance nonfinancial assets or require specialized skills, are provided by an individual possessing those skills, and would typically be purchased if not provided by donation.

A college receives cash from a donor under a trust agreement that requires the college to invest the assets and receive a specified dollar amount of earnings. Upon the death of the donor the assets revert to the donor's estate. This is an example of a charitable lead trust split-interest agreement.

Which of the following is true regarding accounting and financial reporting for private colleges and universities?

Cash paid for interest is classified as an Operating activity in the Statement of Cash Flows for a private university.

Cash paid for equipment is classified as an Investing activity in the Statement of Cash Flows for a private university.

Inflows from self-supporting university operations, known as auxiliary enterprises, are unrestricted revenue by private colleges.

Identify the primary financial reporting body for each of the following forms of college or university A. Private not-for-profit B. For Profit - Investor owned C. Public - government owned

Public colleges and universities use the economic resources measurement focus and the accrual basis of accounting.

Public institutions of higher education are required to produce a Statement of Cash flows in addition to a Statement of Net Position and a Statement of Revenues, Expenses, and Changes in Net Position.

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.

Record the following transactions on the books of Franklin College, a private college. All of the transactions are for the year 2017. a) The College received $315,000 in funds that were pledged in 2016, to be used for unrestricted purposes in 2017. b) The College was awarded $500,000 in reimbursement type grants from the federal government. $430,000 was expended on these projects and $410,000 in cash was received. c) On Dec. 1, the College received a pledge of $6,000,000 to build a new basketball arena. The funds were not expended or received in 2017, but are expected to be received early in 2018. d) The College had received cash of $200,000 in 2016 to be used to purchase computer equipment for the student labs. The equipment was purchased and put into service in early January 2017. The equipment has a five-year life and the College follows the practice of maintaining the balance of fixed assets net of depreciation) in the temporarily restricted net asset category. e) On Dec. 31, the College received an unrestricted pledge to receive $20,000 per year each year for six years, beginning on December 31, 2017. The first installment of $ 20,000 was received on that date. The discount rate is 6%. The present value of six payments of $20,000 is $104,248.

Public and private colleges account for split-interest agreements in the same way.