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| 1.
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Which of the following would not be subject to Financial Accounting Standards Board (FASB) pronouncements regarding colleges and universities? |
| | A) | Notre Dame University |
| | B) | Hebrew Union Rabbinical College |
| | C) | The Ohio State University |
| | D) | all of the above are subject to FASB pronouncements |
| | E) | none of the above are subject to FASB pronouncements; colleges and universities have their own standards-setting board |
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| 2.
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The Financial Accounting Standards Board has issued Statements that established accounting requirements specifically for private not-for-profit organizations. What topics have these pronouncements dealt with? |
| | A) | depreciation |
| | B) | accounting for contributions |
| | C) | accounting for investments in debt and equity securities |
| | D) | capital and operating leases |
| | E) | A, B, and C are all correct |
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| 3.
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Private not-for-profit colleges receive unrestricted inflows from |
| | A) | tuition and fees |
| | B) | governmental appropriations |
| | C) | activities of auxiliary enterprises |
| | D) | contributions |
| | E) | all of the above |
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| 4.
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Which of the following format is NOT allowed for a private college's Statement of Financial Position? |
| | A) | single-column "corporate" style |
| | B) | FASB Net Asset Class Disaggregation |
| | C) | Operating/Capital Disaggregation |
| | D) | Managed Asset Group Disaggregation |
| | E) | all of the above are acceptable |
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| 5.
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For a private college, how is a tuition reduction for employees reported in the Statement of Activities? |
| | A) | as a reduction of tuition revenue |
| | B) | as bad debt expense |
| | C) | as compensation expense |
| | D) | either A or C is acceptable |
| | E) | none of the above |
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| 6.
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For a private college or university, how should athletic scholarships be reported in the Statement of Activities? |
| | A) | as an expense of the athletics program |
| | B) | as compensation expense |
| | C) | as bad debt expense |
| | D) | as a scholarship allowance that would be treated as a reduction in revenue |
| | E) | none of the above |
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| 7.
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Which of the following is not one of the net assets categories required for a private college or university? |
| | A) | unrestricted |
| | B) | temporarily restricted |
| | C) | permanently restricted |
| | D) | auxiliary net assets |
| | E) | all of the above; colleges and universities have the above four net asset categories |
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| 8.
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Johns College (a private institution) would like to add a new wing to its library so the board of trustees voted to set aside $1,500,000 per year for the next three years. At the end of three years, the $4,500,000 plus any earnings are to be spent on construction. During the three-year period, the net assets associated with this library fund would be classified as: |
| | A) | unrestricted |
| | B) | temporarily restricted |
| | C) | permanently restricted |
| | D) | an endowment |
| | E) | none of the above |
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| 9.
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Rabbi Singer, a graduate of Hebrew Union College, donated $2,000,000 to the school with the stipulation that earnings from the donation be used to award scholarships to students. Under the terms of the agreement, at the end of ten years, the College may spend the original $2,000,000 to acquire books for the library. Which of the following is true? |
| | A) | This agreement is called a quasi-endowment because the principal may ultimately be spent. |
| | B) | This agreement would be classified as permanently restricted for the first ten years, then temporarily restricted until spent on library books. |
| | C) | This agreement would be classified as temporarily restricted for ten years; it would be reclassified as unrestricted when the library books are purchased. |
| | D) | This arrangement is called a term endowment. |
| | E) | both C and D |
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| 10.
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During 2003, an alumnus of Yale University donated $10,000,000 to the school with the understanding that the principal (the original $10,000,000) may never be spent. However, the earnings from the principal may be spent at any time in any manner the University chooses. During 2003, the donation earned $1,000,000, none of which has been spent. For reporting purposes in 2003, Yale should report: |
| | A) | $11,000,000 in permanently restricted resources |
| | B) | $10,000,000 in permanently restricted resources and $1,000,000 in unrestricted resources |
| | C) | $10,000,000 in permanently restricted resources and $1,000,000 in temporarily restricted resources |
| | D) | $11,000,000 in temporarily restricted resources |
| | E) | B or C, depending on the University's preference |
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| 11.
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Which of the following should be directly subtracted from tuition revenue rather than recorded as an expense for a private college? |
| | A) | Tuition scholarships awarded by the college to its students |
| | B) | Tuition granted in exchange for college employee services |
| | C) | Tuition granted in exchange for graduate student teaching assistance |
| | D) | all of the above would be directly subtracted from tuition revenue |
| | E) | none of the above would be directly subtracted from tuition revenue |
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| 12.
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During June of 2006, Neff College, a private institution, assessed and collected $600,000 in tuition for its 15-week summer session. The session begins on June 17. Neff's fiscal year end is June 30. How much tuition revenue should be recorded in the year ended June 30, 2006 for the summer session? |
| | A) | $600,000 |
| | B) | $520,000 |
| | C) | $ 80,000 |
| | D) | $ 40,000 |
| | E) | -0- |
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| 13.
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For Fall 2006, Hayes University's unrestricted revenues included tuition and fees of $4,000,000. Of this amount, $120,000 is expected to be uncollectible. What journal entry should be made to record this information? Hayes is a private not-for-profit university. |
| | A) | Debit Accounts Receivable for $4,000,000; credit Revenues: Unrestricted — Tuition and Fees for $3,880,000; credit Allowance for Uncollectible Accounts for $120,000 |
| | B) | Debit Accounts Receivable for $3,880,000; credit Revenues: Unrestricted — Tuition and Fees for $3,880,000 |
| | C) | Debit Accounts Receivable for $4,000,000; credit Revenues: Unrestricted — Tuition and Fees for $4,000,000; debit Bad Debt Expense for $120,000; credit Allowance for Uncollectible accounts for $120,000 |
| | D) | Debit Accounts Receivable for $4,000,000; debit Bad Debt Expense for $120,000; credit Revenues: Unrestricted — Tuition and Fees for $4,120,000 |
| | E) | None of the above |
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| 14.
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For Fall 2006, Hayes University, a private not-for-profit institution, awarded $320,000 in scholarships for which no service was required, and it gave tuition waivers of $90,000 to work-study students. How should Hayes record this information? |
| | A) | Debit Revenues: Unrestricted — Tuition and Fees for $410,000 and credit Accounts Receivable for $410,000 |
| | B) | Debit Tuition Discount: Unrestricted — Student Aid for $320,000, debit Institutional Support Expense for $90,000, and credit Accounts Receivable for $410,000 |
| | C) | Debit Tuition Discount: Unrestricted — Student Aid for $410,000 and credit Accounts Receivable for $410,000 |
| | D) | Debit Institutional Support Expense for $410,000; credit Accounts Receivable for $410,000 |
| | E) | None of the above |
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| 15.
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Hamilton College has a collection of rare works of art displayed in a gallery on campus. The college has never capitalized its collection. Which of the following statements is true? |
| | A) | Recent guidance from FASB requires the college to capitalize all collections and to recognize any impairment of such items that might occur |
| | B) | The college is required to capitalize collections prospectively beginning in 2007 |
| | C) | The college may choose to capitalize or not capitalize collections; if it chooses to capitalize, it can do so retroactively or prospectively |
| | D) | GAAP do not allow the college to capitalize any collections |
| | E) | None of the above |
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| 16.
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The chapel of Isaac College, a private institution, contains two marble statues that were sculpted several hundred years ago. They are carefully tended by professional staff and are permanently displayed on either side of the chapel's altar. The statues were a gift from a philanthropist who required that they never be sold. With respect to financial reporting for the College, these statues: |
| | A) | must be capitalized |
| | B) | must be depreciated |
| | C) | must not be capitalized |
| | D) | need not be capitalized or depreciated |
| | E) | both A and B |
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| 17.
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Which of the following is true of accounting and reporting for a private college? |
| | A) | Expenses are classified as unrestricted, temporarily restricted, and permanently restricted |
| | B) | If an alumnus makes a conditional promise to give, it should be recorded as temporarily restricted at the time the promise is made |
| | C) | Expenses should be reported by function, either in the financial statements or the notes |
| | D) | If both unrestricted and restricted resources are available for a restricted purpose, the college should recognize the use of unrestricted resources first. |
| | E) | all of the above are true |
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| 18.
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Burns University, a private institution made the following adjusting entry at its fiscal year end:
| | Debit | Credit | | Long-Term Investments | 2,500 | | | Gain on Long-Term Investments — Permanently Restricted | | 2,500 |
Which of the following would be the likely description for this entry? |
| | A) | to record sale of endowment investments at a gain |
| | B) | to record sale of quasi-endowment investments at a gain |
| | C) | to record increase in market value of term endowment investments |
| | D) | to record increase in market value of endowment investments |
| | E) | to record decrease in market value of quasi-endowment assets |
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| 19.
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An arrangement whereby a private college shares benefits of a donation with the donor is called: |
| | A) | a split-interest agreement |
| | B) | a quasi-endowment |
| | C) | a term endowment |
| | D) | an auxiliary enterprise |
| | E) | a scholarship |
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| 20.
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Which of the following is a trust established by a donor to ensure that a specified dollar amount or a specified percentage of the trust's fair market value is paid to a beneficiary, and the remainder is paid to the institution at the end of the trust's term? |
| | A) | charitable lead trust |
| | B) | perpetual trust held by a third party |
| | C) | charitable remainder trust |
| | D) | charitable gift annuity |
| | E) | pooled income fund |
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| 21.
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In March 2006, Hamilton College received cash contributions of $100,000 that were to be used for an expansion on the science building and pledges of $80,000. The pledges were expected to be collected in the next fiscal year and could be used for any purpose when the were collected. How should Hamilton record these transactions? |
| | A) | Debit Cash for $100,000 and Contributions Receivable for $80,000; Credit Revenues: Contributions — Temporarily Restricted for $180,000 |
| | B) | Debit Cash for $100,000 and Contributions Receivable for $80,000; credit Revenues: Contributions — Unrestricted for $80,000 and Revenues: Contributions — Temporarily Restricted for $100,000 |
| | C) | Debit Cash for $100,000 and Contributions Receivable for $80,000; Credit Revenues: Contributions — Temporarily Restricted for $80,000 and Revenues: Contributions — Permanently Restricted for $100,000 |
| | D) | Debit Cash for $100,000 and Contributions Receivable for $80,000; credit Revenues: Contributions — Permanently Restricted for $80,000 and Revenues: Contributions — Temporarily Restricted for $100,000 |
| | E) | none of the above |
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| 22.
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In a charitable lead trust arrangement: |
| | A) | a fixed amount or percentage is paid to the donor (or a beneficiary) for a certain term |
| | B) | the remainder of the trust at the end of its term is paid to the institution |
| | C) | the institution may or may not hold the trust assets |
| | D) | all of the above |
| | E) | none of the above |
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| 23.
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Which of the following is true about a pooled life income fund? |
| | A) | Life income funds are funds that pay the donor (or a beneficiary) all the income of the fund during his/her lifetime. |
| | B) | Life income funds are funds that pay the donor's beneficiary the remainder of the trust when the donor dies. |
| | C) | When trust assets are pooled, they are recorded at fair value. |
| | D) | A and C are true |
| | E) | all of the above are true |
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| 24.
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Which of the following is NOT an auxiliary enterprise in a private university? |
| | A) | instruction |
| | B) | food service |
| | C) | dormitories |
| | D) | bookstores |
| | E) | All of the above |
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| 25.
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Professor Drake, Ph.D. teaches at Brooker College, a private institution. Because of the school's budget crisis, she has agreed to teach, without pay, an advanced accounting class for six graduate students. The fair value of this teaching assignment is $8,500. With respect to financial reporting for Brooker College, the value of Dr. Drake's teaching: |
| | A) | should be recorded as contribution revenue |
| | B) | should be recorded as an instruction expense |
| | C) | should not be recorded |
| | D) | increases permanently restricted net assets |
| | E) | both A and B |
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| 26.
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Metzger University, a private institution purchased research equipment with unrestricted funds. Which of the following is/are true? |
| | A) | Depreciation on the equipment should be allocated to the functional category, "Research" |
| | B) | The University can adopt the modified approach and avoid capitalizing the equipment. |
| | C) | The equipment must be recorded as an increase in permanently restricted net assets. |
| | D) | The equipment may not be recorded initially as a temporarily restricted increase in net assets. |
| | E) | all of the above are true |
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