Deck 11: College and University Accounting

Question 1

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

Answer 1

False
Explanation: Public colleges and universities are required to report net position as Net Investment in Capital Assets, Restricted and Unrestricted.

Question 2

Private, not-for-profit colleges and universities must have a Statement of Financial Position, Statement of Activities, Statement of Cash Flows, and Notes to the Financial Statements included in their financial report.

Answer 2

True
Explanation: The required statements for a private, not-for-profit college or university are: Statement of Financial Position/Balance Sheet, Income Statement, Statement of Activities, Statement of Cash flows and notes to the financial statements.

Question 3

Private colleges and universities are required to report net assets within the categories of unrestricted, restricted and net investment in capital assets.

Answer 3

False
Explanation: : Private colleges and universities are required to report net assets within the categories of Permanently Restricted Net Assets, Temporarily Restricted Net Assets and Unrestricted Net Assets.

Question 4

Financial statements prepared for public colleges and universities present net position as: unrestricted, restricted, or net investment in capital assets.

Question 5

Public colleges and universities are required to report as engaged in both governmental- and business-type activities because they receive tax dollars and charge user fees.

Question 6

Private colleges and universities use the same accounting and reporting standards as public colleges and universities.

Question 7

Higher education institutions that report as engaged in business-type activities only should report the same residual equity classifications Net investment in capital assets, restricted, unrestricted) as are reported in the government-wide statement of Net Position.

Question 8

Public higher education institutions that report as special-purpose entities engaged in business-type activities only are still required to prepare a Management's Discussion and Analysis.

Question 9

Public colleges may be included as component units in the state government's CAFR.

Question 10

Public colleges typically report as special-purpose entities engaged only in business-type activities.

Question 11

Private colleges and universities are required to prepare a Management's Discussion and Analysis.

Question 12

Most public colleges and universities report as general-purpose entities engaged in only business-type activities.

Question 13

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

Question 14

Public higher education institutions typically report as special-purpose entities engaged in governmental and business-type activities or in governmental-type activities only.

Question 15

Public colleges and universities are subject to the standards issued by the GASB.

Question 16

Private colleges and universities are subject to the standards issued by the GASB.

Question 17

Investor-owned proprietary schools are subject to the standards issued by the FASB

Question 18

Private, not-for-profit colleges and universities and investor-owned schools follow FASB standards and adhere to the accrual basis of accounting.

Question 19

Private colleges and universities use the same accounting and reporting standards as other private not-for-profit organizations.

Question 20

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

Question 21

Under NACUBO guidelines, tuition waivers resulting from work-study programs are deducted from revenue.

Question 22

FASB standards require private not-for-profit colleges and universities to present a Statement of Cash Flows.

Question 23

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

Question 24

Academic or athletic scholarships that do not require service to the college or university are considered scholarship allowances and treated as reductions in revenue.

Question 25

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

Question 26

FASB standards require private colleges and universities to present a Statement of Functional Expense.

Question 27

Auxiliary enterprise activities represent revenues and expenses related to units of the college that provide services to students on a user fee basis.

Question 28

Private colleges and universities record depreciation expense and allocate it to functions.

Question 29

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

Question 30

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.

Question 31

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.

Question 32

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.

Question 33

A tuition waiver for a student who works as a graduate assistant is treated as a reduction in revenue.

Question 34

State appropriations for higher education institutions are to be reported as nonoperating revenues in the Statement of Revenues, Expenses, and Changes in Net Position for a public institution.

Question 35

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

Question 36

Tuition revenue for summer classes spanning two fiscal periods must be allocated on a pro-rata basis.

Question 37

Tuition revenue for summer classes spanning two fiscal periods must be recorded in the period when the drop date passes and refunds are no longer an option.

Question 38

General state appropriations are treated as operating revenue of public colleges and universities.

Question 39

Public 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.

Question 40

NACUBO guidelines require both revenues and expenses for split summer sessions to be apportioned to the two fiscal years.

Question 41

Public colleges and universities are primarily) subject to financial reporting standards issued by:

A) FASB.
B) GASB.
C) AICPA.
D) None of the above.

Question 42

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

Question 43

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

Question 44

Generally speaking, accounting standards for private colleges tend to recognize revenue when a split-interest agreement is created while accounting standards of public colleges defer recognition until it is realized.

Question 45

A donor pledges to support a program for a future year. Public colleges and universities recognize contribution revenue in the year in which the unconditional pledge is made.

Question 46

Pell Grants received by public colleges are classified as non-operating revenue.

Question 47

Revenue for reimbursement grants may be recognized before expenditures take place, so long as the grant has been awarded.

Question 48

A donor pledges to support a program for a future year. Private colleges and universities recognize contribution revenue in the year in which the unconditional pledge is made.

Question 49

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.

Question 50

According to GASB, with respect to public colleges and universities, pledges receivable are recognized as assets and revenues when eligibility requirements are met.

Question 51

Public colleges and universities follow __________ guidelines while private colleges and universities follow ________ guidelines

A) GAO, FASB.
B) FASB, GAO.
C) GASB, FASB.
D) FASB, GASB.

Question 52

With respect to public colleges, which of the following is not correct?

A) GASB requires public colleges to report long-term debt on the Statement of Net Position, to accrue interest and amortize debt discount and premium.
B) GASB requires public colleges to report capital assets on the Statement of Net Position, to expense depreciation and to record gains or losses on disposals of capital assets.
C) Cash received under Pell Grants is treated as held for the student in an agency relationship with offsetting asset and liability balances.
D) All of the above are correct

Question 53

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

A) FASB.
B) GASB.
C) AICPA.
D) None of the above.

Question 54

Private universities follow the authoritative standards of _____ and use the _____ basis of accounting.

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

Question 55

Pell Grants received by private colleges are classified as non-operating revenue.

Question 56

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

Question 57

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

Question 58

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

Question 59

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

A) Public colleges and universities may choose to report in the same manner as private colleges and universities, using FASB standards.
B) Public colleges and universities may choose to report as special-purpose entities.
C) Both A and B are true.
D) Neither A nor B is true.

Question 60

Private colleges and universities recognize contribution revenue in the year in which the unconditional pledge is made.

Question 61

A private college had tuition and fees for the year ended June 30, 2017 in the amount of $45,000,000. Scholarships, for which no services were required, amounted to $4,800,000. Graduate assistantships, for which services were required, amounted to $2,300,000. The amount to be reported by the college for net tuition and fee revenue would be:

A) $37,900,000.
B) $40,200,000.
C) $42,700,000.
D) $45,000,000.

Question 62

In addition to a Statement of Financial Position and a Statement of Activities, a private college or university is required to present:

A) A Statement of Functional Expense.
B) A Statement of Cash Flows.
C) Both a) and b).
D) Neither a) nor b).

Question 63

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

A) The accrual basis of accounting is used to measure revenues and expenses.
B) Encumbrances are recorded at the time purchase orders are issued.
C) Depreciation expense is recorded.
D) All of the above are true.

Question 64

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

A) Statement of Changes in Fund Balance.
B) Statement of Revenues and Expenditures.
C) Budgetary Comparison Statement.
D) None of the above is a required statement.

Question 65

Which of the following types of college/university would have these components of the Financial Report?
$\bullet$ Statement of Financial Position.
$\bullet$ Statement of Activities.
$\bullet$ Statement of Cash Flows.
$\bullet$ Notes to the Financial Statements.

A) Investor Owned.
B) Public University.
C) Private Not-for-Profit.
D) None of the above.

Question 66

A public college had tuition and fees of $21,000,000. Scholarships, for which no services were required, amounted to $2,500,000. Graduate assistantships, for which services were required, amounted to $1,600,000. The amount to be reported by the public college as net tuition and fees would be:

A) $21,000,000.
B) $19,400,000.
C) $18,500,000.
D) $16,900,000.

Question 67

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

A) Reimbursement type grants are recorded as operating revenue when qualifying expenses are made.
B) Auxiliary enterprise activities represent revenues and expenses related to units of the college that provide services to students on a user fee basis and is classified as operating revenue.
C) Student financial aid is a revenue contra account
D) All of the above are true.

Question 68

Public colleges are required to report residual equity in the following categories:

A) Unrestricted, Restricted, and Net Investment in Capital Assets
B) Temporarily Restricted , Permanently Restricted and Unrestricted
C) Unrestricted, Temporarily Restricted and board designated
D) Restricted, Unrestricted and Temporarily Restricted

Question 69

Scholarships tuition discounts) provided to students where no service is required:

A) Are included in tuition revenue and recorded as an expense.
B) Are reported as a reduction of revenue by directly reducing the revenue account or increasing a contra- revenue account.
C) Are not included in tuition revenue but are included as an "other source".
D) Are reported as an adjustment to tuition revenue in the government-wide statements.

Question 70

Which of the following is true?

A) Tuition and fees charged are included in income and the fees waived for graduate assistants are expensed.
B) Scholarship allowances for which no services are required are expensed.
C) Fees waived for graduate assistantships for which services are required are deducted directly from tuition revenue.
D) Revenues for summer sessions are recorded in deferred revenues and recorded as revenue when the semester ends.

Question 71

According to NACUBO guidelines, what is the correct treatment for recognizing summer school revenues and expenses when a college's fiscal year ends on June 30?

A) Recognize the entire amount of revenues and expenses in the year in which the summer term is predominantly conducted.
B) Recognize the entire amount of revenues and expenses in the year in which the summer term began.
C) Apportion the revenues and expenses to the two fiscal years, following accrual accounting practices similar to those employed by commercial enterprises.
D) Recognize expenses in the year in which they were billed and the expenses in the year in which they were incurred.

Question 72

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

A) Revenues are required to be presented in the categories of Permanently Restricted, Temporarily Restricted and Unrestricted, while all expenses are classified as Unrestricted.
B) Tuition fees waived by the institution in return for services provided by employees and student assistants are shown as expenses.
C) Interest expense is accrued and bond premiums and discounts are amortized.
D) None of the above.

Question 73

For private colleges and universities, reclassifications of temporarily restricted and unrestricted net assets could be made:

A) For satisfaction of purpose restrictions.
B) When time restrictions expire.
C) If the resources donated for fixed assets have been expended on such assets.
D) All of the above.

Question 74

Private colleges are required to report residual equity in the following categories:

A) Unrestricted and Restricted
B) Temporarily Restricted , Permanently Restricted and Unrestricted
C) Unrestricted, Temporarily Restricted and board designated
D) Restricted, Unrestricted and Temporarily Restricted

Question 75

Fees waived by an educational institution in return for services to be provided by students are reported:

A) As a reduction in tuition revenue by directly reducing the revenue account or increasing a contra-revenue account.
B) As an adjustment to tuition revenue in the government-wide statements.
C) As an expense.
D) By deducting the waived fee from tuition revenue before it is recorded.

Question 76

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

A) Pell Grants are reported as nonoperating revenue
B) Revenues from residence halls, dining services and bookstores are reported as Auxiliary Enterprises - within nonoperating revenue.
C) Expenses associated with central management, planning and administration are classified as Institutional Support - within income from operations
D) All of the above are all true.

Question 77

The equity section of the balance sheet for investor-owned colleges and universities includes which of the following designations?

A) Unrestricted Net Assets, Temporarily Restricted Net Assets, and Permanently Restricted Net Assets.
B) Paid in Capital and Retained Earnings.
C) Net Investment in Capital Assets, net of related Debt; Restricted Net position; and Unrestricted Net position.
D) None of the above.

Question 78

Which of the following would be true regarding the Statement of Net Position for a public college?

A) Both current and long-term assets and liabilities are presented
B) The net asset categories are: net investment in capital assets, restricted and unrestricted.
C) Both of the above are true.
D) Neither of the above is true.

Question 79

Which of the following is not true of a Statement of Activities prepared for a private college or university?

A) Reimbursement type grants are recorded as operating revenue when qualifying expenses are made, not when the grant is approved.
B) Reclassifications from temporarily restricted to unrestricted net assets are reported when the donor's restrictions have been met.
C) Expenses may be unrestricted or temporarily restricted depending on donor intent.
D) All of the above are true.

Question 80

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

A) State appropriations and Pell Grants are reported as operating revenue
B) Revenues from residence halls, dining services and bookstores are reported as Auxiliary Enterprises - within operating revenue.
C) Expenses associated with central management, planning and administration are classified as Institutional Support
D) None of the above, these are all true.