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Exam 15: Accounting for Colleges and Universities

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Question 1

True/False

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

A) True
B) False

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Question 2

Multiple Choice

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During the year ended June 30,2017,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 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 30,2017?

A) Choice A
B) Choice B
C) Choice C
D) Choice D

E) C) and D)
F) A) and C)

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C

Question 3

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Manthei University,a private university,has provided the following information concerning selected transactions.Prepare in general journal form the entries required for each of the transactions. 1.The university was awarded a federal grant in the amount of $1,800,000 to be used for a specified research project (determined to be a nonexchange transaction).During the year the entire $1,800,000 was received and expenses for the specified project totaled $1,000,000. 2.Ira Beaker,a renowned chemist and alumnus,donated $7,000,000 to be used for the construction of new chemistry building to be named Beaker Hall.The gift is to be paid to the university in equal installments over a two-year period; the sum for the current year was received in cash. 3 Cash outlays of $2,750,000 were made during the year for construction in progress on the new chemistry building.Other construction projects completed during the year,also financed by temporarily restricted resources,amounted to $1,500,000 for buildings and $500,000 for improvements other than buildings.There was no debt financing used for these projects. 4.During the year bonds with a face value of $180,000 were retired.

If a private university receives $1,000,000 in fiscal year 2017 as a grant restricted for a specific research project and makes expenditures amounting to $400,000 during fiscal year 2017 properly chargeable to the grant,how much should be reported as revenues in fiscal year 2017? Explain.

Culver City College,a public college,has a 10-week summer session that starts on June 25,2017,so that one week is held during FY 2017 and the other nine weeks meet during FY 2018.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 30,2017 and June 30,2018?

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

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?

Refunds of college or university tuition or fees should be recorded as expenses in the period in which they are made.Do you agree? Why or why not?

A private university receives $1,000,000 in fiscal year 2017 as a grant restricted for a specific research project and incurs expenses of $400,000 related to the research project during fiscal year 2017. Make all necessary journal entries to record the transactions related to the grant for fiscal year 2017.

During the years ended June 30,2017 and 2018,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 10,2016.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 2017 FY 2018 Gift receipts $200,000 $800,000 Cancer research expenses $100,000 $900,000 How much had temporarily restricted net assets increased as of the end of FY2018 ?

Which of the following receipts may properly be accounted for as an increase in unrestricted net assets by a private college?

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

How would estimated uncollectible tuition and fees be reported on the financial statements of a university?

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

A private college would report which of the following assets differently than a public college?

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

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.

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?

Which of the following statements about the Uniform Prudent Management of Institutional Funds Act (UPMIFA) is correct?

Which of the following is a typical classification of a functional expense in a college or university?