Chapter Seventeen Test Bank Multiple Choice Questions

1. Charges for tuition for the current semester of a local college totaled $300,000.
Academic scholarships were awarded to students in the amount of $25,000 and
tuition wavers were given to children of employees in the amount of $10,000.
he college should report
a. revenues $300,000.
!. e"penses of $35,000.
c. revenues of $2#5,000, net of $25,000 in allowances.
d. e"penses of $10,000.
e. $oth items a and !.
f. Both items c and d.
2. A college has a %une 30 fiscal year end. Assume that tuition revenue for the
summer session that !egins %une 1, 20&', and ends August 31, 20&' totals
$2#0,000. uition is !illed and is due at the !eginning of the session term. (ow
much revenue should !e reported as of the fiscal year ended %une 30, 20&')
a. $2#0,000
b. $ 90,000
c. $ 1'0,000
d. $ 135,000
e. $ 0
3. *f a government university provides loans to +ualifying students for tuition and
fees, the loans should !e reported on the statement of cash flows as
a. operatin activities.
!. noncapital financing activities.
c. capital and related financing activities.
d. investing activities.
e. ,oans are not reported on the statement of cash flows.
-. A government university that chooses to report as a !usiness.type special purpose
government, purchases land for a planned dormitory !y securing a ten year !an/
loan. he entry to record the purchase and procurement of funding would include
a. a 01$* to assets.
!. a C210* to notes paya!le.
c. a 01$* to e"penditures.
d. a C210* to other financing sources.
e. Both items a and b.
f. $oth items c and d.
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5. A wealthy alum donated land to !e used for a new athletics facility at the local
state university. he land has a fair mar/et value of $250,000. he donor
purchased the land ten years ago at a cost of $#5,000. he entry to record the
receipt of the donation would !e
dr cr
a. !and $"#0,000
Capital Contributions $"#0,000
!. ,and $250,000
6ther 7inancing 8ources $250,000
c. ,and $ #5,000
Capital Contri!utions $ #5,000
d. ,and $250,000
8pecial *tem $250,000
e. ,and $ #5,000
8pecial *tem $ #5,000
9. 8toc/ valued at $15,000 was donated to a college. he donor stipulated that the
stoc/ was to !e immediately sold and the proceeds used toward college:s capital
campaign. he entry to record the receipt of the gift would !e
dr cr
a. 2estricted Assets ; Capital Campaign $ 15,000
0eferred 2evenue $ 15,000
b. $estricted %ssets & Capital Campain $ '#,000
Capital Contributions $ '#,000
c. <eneral *nvestments $ 15,000
0eferred 2evenue $ 15,000
d. <eneral *nvestments $ 15,000
8pecial *tem $ 15,000
#. A university received a restricted donation from one of their trustees. he
donation was to !e used to pay de!t service costs for one year on the new athletic
field. =hen received, the donation will !e reported on the statement of cash
flows as
a. operating activities.
!. noncapital financing activities.
c. capital and related financin activities.
d. investing activities.
e. >one of the a!ove.
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'. A university:s endowment fund has investments that were purchased for
$-00,000. As of the end of the fiscal year, the fair value of the investments
decreased !y $33,000. =hat ?ournal entry is re+uired to reflect the change in the
fair mar/et value of the investments)
dr cr
a. ,oss on 1ndowment *nvestments $ 33,000
1ndowment *nvestments $ 33,000
!. *nterest 1"pense $ 33,000
1ndowment *nvestments $ 33,000
c. (nterest $evenues $ )),000
*ndo+ment (nvestments $ )),000
d. *nterest 1"pense $ 33,000
0eferred 2evenue $ 33,000
e. >one of the a!ove.
4. A college was the recipient of an annuity gift. he elderly alum donated cash of
$110,000 and investments of $910,000 with the restriction that the college pay
them a sum of $50,000 per year for five years. *f the annuity paya!le has !een
actuarially valued at $305,000, the college should report revenues upon receipt of
the gift in the amount of
a. $0
!. $120,000
c. $3#0,000
d. $,'#,000
e. $#20,000
10. *f actuarial assumptions change such that the annuity paya!le is actually less than
originally recorded, the change should !e reported
a. immediatel- as a reduction in the annuit- pa-able.
!. immediately as an e"pense.
c. as an e"pense at the time the annuity o!ligations are fulfilled.
d. as a reduction of annuity paya!le at the time the annuity o!ligations are
fulfilled.
e. >one of the a!ove.
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11. =hich of the following statements are true)
a. All colleges and universities report under the same <AA5 guidelines.
!. 5rivate colleges and universities must report using the guidance in 7A8$
8tatements 119 and 11#. <overnment colleges and universities are
permitted to follow that guidance or the guidance in the A*C5A@s college
and university audit guide.
c. .rivate collees and universities must report usin the uidance in
/%SB Statements ''0 and ''1. 2overnment collees and universities
must report usin the uidance in 2%SB Statement )#.
d. <overnment colleges and universities must report as special purpose
governments engaged only in !usiness.type activities.
12. he !alance sheet of government colleges and universities engaged only in
!usiness.type activities would not report which component of net assets)
a. Anrestricted net assets
b. Temporaril- restricted net assets
c. *nvested in capital assets, net of related de!t
d. 2estricted net assets
13. he !alance sheet of nongovernment, not.for.profit colleges and universities
would report which component of net assets)
a. Anrestricted net assets
!. emporarily restricted net assets
c. 5ermanently restricted net assets
d. %ll of the above
1-. =hich financial statements are re+uired for government colleges and universities
engaged only in !usiness.type activities)
a. $alance sheet, statement of revenues, e"penditures, and other changes,
and statement of cash flows
b. Balance sheet, statement of revenues, e3penses, and chanes in net
assets, and statement of cash flo+s
c. $alance sheet, statement of revenues, e"penses, and changes in net assets,
and statement of changes in net assets
d. $alance sheet, statement of activities, and statement of cash flows
15. =hich financial statements are re+uired for nongovernment, not.for.profit
colleges and universities)
a. $alance sheet, statement of revenues, e"penditures, and other changes,
and statement of cash flows
!. $alance sheet, statement of revenues, e"penses, and changes in net assets,
and statement of cash flows
c. $alance sheet, statement of revenues, e"penses, and changes in net assets,
and statement of changes in net assets
d. Balance sheet, statement of activities, and statement of cash flo+s
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19. he statement of cash flows of nongovernment, not.for.profit colleges and
universities would report which category of cash flows)
a. (nvestin
!. >oncapital financing
c. Capital and related financing
d. All of the a!ove
1#. he statement of cash flows of government colleges and universities engaged
only in !usiness.type activities would report which category of cash flows)
a. *nvesting
!. >oncapital financing
c. Capital and related financing
d. %ll of the above
1'. uition revenues of government colleges and universities are reported
a. 4et of bad debts, scholarships and fello+ships.
!. >et of !ad de!ts.
c. >et of scholarships and fellowships.
d. At the gross amount of the standard tuition and fees.
14. <overnment colleges and universities must recogniBe donations received with
purpose restrictions asC
a. 0eferred revenue until the restrictions are met.
!. 6perating revenues.
c. 4onoperatin revenues.
d. >one of the a!ove.
20. 5urchase of capital assets !y government colleges and universities engaged only
in !usiness would !e reported asC
a. 1"penditures.
!. ransfers to capital assets.
c. 2eclassifications.
d. 5oes not chane total net assets.
21. Danagement:s discussion and analysis must !e reported !yC
a. All colleges and universities.
!. >ongovernment not.for.profit colleges and universities.
c. %ll overnment collees and universities.
d. 6nly government colleges and universities that report as special purpose
governments engaged only in !usiness.type activities.
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22. <overnment colleges and universities engaged only in !usiness.type activities
would report state appropriation asC
a. 6perating revenues
!. 8pecial items
c. 6ther financing sources
d. 4onoperatin revenues
23. A state university assessed its students $2,000,000 of tuition and fees. (owever,
only $1,500,000 was e"pected to !e collected !ecause of an estimated
uncollecti!le amount of $25,000, scholarship allowances of $-00,000, and tuition
waivers to staff of $#5,000. =hat amount of net tuition and fees revenue should
!e reported in the statement of revenues, e"penses and changes in net assets)
a. $1,500,000
b. $',#1#,000
c. $1,900,000
d. $2,000,000
2-. A government university received a cash donation $1,000,000 to create an
endowment. he income of the endowment can !e used to support any activity of
the university. *n the !alance sheet, the $1,000,000 endowment should !e
included in which component of net assets)
a. Anrestricted net assets
b. $estricted & none3pendable net assets
c. *nvested in capital assets, net of related de!t
d. 5ermanently restricted net assets
25. Chase 7oundation esta!lishes a $1,000,000 trust for a government university. he
local !an/ is appointed as trustee of the fund. he income of the trust can !e used
to support any activity of the university. *n the university:s !alance sheet, the
$1,000,000 trust should !e included in which component of net assets)
a. 4ot reported
!. Anrestricted net assets
c. 2estricted ; none"penda!le net assets
d. 5ermanently restricted net assets
29. =hich type of split.interest gifts would normally not !e reported !y a government
university)
a. Annuity gifts
!. ,ife income gifts
c. Trust held b- others
d. All of the a!ove
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2#. A state college receives an annuity gift of $200,000 from an individual. he
individual is to receive $1',000 a year for 10 years. he present value of the
payments to the individual is $150,000. (ow much revenues should the college
report from this transaction)
a. $ 0
!. $ 20,000
c. $ #0,000
d. $ 200,000
2'. =hich measurement focus is used !y governmental universities that report as a
!usiness.type special purpose government)
a. Cash measurement focus
b. Current financial resources measurement focus
c. *conomic resources measurement focus
d. >one of the a!ove
24. =hich of the following li/ely would !e found on the !alance sheet of a
governmental university that reports as a !usiness.type activity)
a. 2estricted net assets
!. Anrestricted net assets
c. Capital assets
d. %ll of the above
e. >one of the a!ove
30. =hich fund used !y colleges and universities is most li/e a local government:s
general fund)
a. 6nrestricted current fund
!. 2estricted current fund
c. Ane"pended plant fund
d. Agency funds
e. >one of the a!ove
31. <overnmental universities typically report as
a. general purpose governments.
b. special purpose overnments enaed in onl- business7t-pe activities.
c. special purpose governments engaged in only governmental activities.
d. >one of the a!ove
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32. %im Catlett esta!lishes a trust that is administered !y Dansfield >ational $an/ in
the amount of $#50,000. %im has promised that he will donate an additional
$50,000 a year to the trust in each of the ne"t 5 years. he income from the trust
will go to the state university. (ow much should the university record as income
in the year that the trust is esta!lished)
a. $1,000,000
!. $#50,000
c. $#50,000 plus the present value of the five $50,000 donations
d. $0
33. =hich of the following statements are true regarding life income gifts)
a. 2e+uire the amount of the payment to the !eneficiary to vary !ased on the
earnings of the trust.
b. 2e+uire a fi"ed.dollar payment to !e made annually to a designated
recipient.
c. Assets are recorded at fair value when donated.
d. $oth a and !
e. Both a and c
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