78.Investment income on Endowments held by private colleges and classified as permanently restricted net assets should be recorded as an increase in:
A)Unrestricted net assets.
B)Temporarily restricted net assets.
C)Permanently restricted net assets.
D)Any of the above, depending on the terms of the trust agreement.
79.Which of the following is true regarding the investments of private colleges in securities with determinable fair values?
A)Investments are to be carried at fair value or amortized cost, depending upon whether the investments are in equity or debt securities.
B)Investments are to be carried at fair value; unrealized gains and losses are to be reported in the Statement of Activities along with realized gains and losses.
C)Investments are to be carried at the lower of cost or market with unrealized losses reported in the Statement of Activities along with realized gains and losses.
D)None of the above.
80.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.
81.Which of the following would
notbe considered a split-interest agreement, according to the
Not-for-Profit Guide?
A)Charitable remainder trusts.
B)Charitable gift annuities.
C)Permanent income-sharing agreements.
D)Pooled (life) income funds.
82.A private university billed $20,000,000 in tuition and fees during an academic year. Graduate assistantships, for which services were required, were awarded in the amount of $1,200,000. Scholarships, for which no services were required, were awarded in the amount of $1,400,000. Provision for bad debt was estimated to be $2,000,000. The net tuition and fees that would be reported in the Statement of Activities would be:
A)$18,000,000.
B)$16,800,000.
C)$16,600,000.
D)$15,400,000.
83.A donor gave a gift of $40,000 cash to a private college in 2014to support basic psychology research. The funds were expended in 2015. The private college would recognize the $40,000 as:
A)Revenue in 2014 increasing temporarily restricted net assets; recognize the expense in 2015, and reclassify the resources from temporarily restricted net assets to unrestricted net assets in 2015.
B)Deferred revenue in 2014 and as revenue in 2015, increasing temporarily restricted net assets. The expense would be recognized also in 2015, and the resources would be reclassified from temporarily restricted net assets to unrestricted net assets in 2015.
C) Deferred revenue in 2014 and as revenue in 2015, increasing unrestricted net assets. The expense would be recognized in 2015.
D)Either (b) or (c), depending upon the policy of the private college.
84.Which of the following is true of a Statement of Cash Flows for a private college or university?
A) Either the direct or indirect method is acceptable.
B)Four categories are used: Operating, Capital Related Financing, Non-capital Related Financing, and Investing.
C)Cash flows must be presented separately for Unrestricted, Temporarily Restricted, and Permanently Restricted categories.
D)All of the above are true.
85.A private college received a $2,000,000 gift from a donor. The college’s governing board voted to use the $2,000,000 to establish an endowment, with the intent to keep the principal intact forever. The income from the endowment was to be used to fund research in the biology department. How should the college classify the $2,000,000 gift?
A)Unrestricted.
B)Temporarily restricted.
C)Permanently restricted.
D)Either temporarily or permanently restricted.
86.The NACUBO
Financial Accounting and Reporting Manual
treats estimates of uncollectible student accounts as:
A)A reduction in tuition and fee revenue
B)Bad debt expense
C)Either bad debt expense or a reduction in tuition and fee revenue as long as the policy is consistently applied
D)None of the above; colleges and universities must use the direct write off method
87.In 2015, a major drug company agreed to give a not-for-profit private college $2,100,000 to perform testing of a new drug. An advance payment of $700,000 was received in 2015. The college was to receive $7,000 per individual test. In 2015, the college completed 100 tests. How much revenue should the college report for 2015?
A)$ - 0 - .
B)$ 400,000.
C)$ 700,000.
D)$1,700,000.
The following information applies to the next three questions:
A private foundation made a multi-year pledge to a private college on December 31, 2014, the last day of the fiscal year. The pledge was to pay $15,000 per year each year for five years, beginning on December 31, 2015. The discount rate is 6%. The present value of five payments of $15,000 is $63,185. The present value of four payments of $15,000 is $51,977. No purpose or plant restrictions were involved.