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Homework answers / question archive / Westmoreland County Community College ACCOUNTING 2265 Chapter 9 Accounting for Special-Purpose Entities, Including Public Colleges and Universities True/False Questions 1)City and county governments are typically classified as special purpose governments

Westmoreland County Community College ACCOUNTING 2265 Chapter 9 Accounting for Special-Purpose Entities, Including Public Colleges and Universities True/False Questions 1)City and county governments are typically classified as special purpose governments

Accounting

Westmoreland County Community College

ACCOUNTING 2265

Chapter 9 Accounting for Special-Purpose Entities, Including Public Colleges and Universities

True/False Questions

1)City and county governments are typically classified as special purpose governments.

 

 

 

  1. According to GASB Statement No. 34, “General-purpose governments are thought to be those that offer more than one type of basic governmental service”.

 

 

 

  1. Special-purpose governments generally provide a limited set of services or programs.

 

 

 

  1. Special purpose governments may be stand alone local governments or may be component units of other governments that are issuing separate reports.

 

 

 

  1. General-purpose governments are those that offer more than one type of basic governmental service, while special-purpose entities generally provide a limited, or single, set of programs or services.

 

 

 

  1. GASB standards permit exercise of judgment when determining whether a government is general-purpose or special-purpose.

 

 

 

  1. A County could be either a general-purpose or a special purpose government.

 

 

 

  1. The implementation guide for GASB Statement 34 provides a distinction by indicating that “general purpose governments are thought to be those that offer more than one type of basic governmental service.

 

 

 

 

  1. Special-purpose governments generally provide a single or limited set of governmental services or programs.

 

 

 

  1. Fire districts are examples of general–purpose state or local governments:
  2. According to GASB Statement 34, governmental activities are generally financed through taxes, intergovernmental revenues and other nonexchange revenues.

 

 

 

  1. Financial reporting for a special-purpose local government depends on whether that government is engaged in governmental-type, business-type or fiduciary-type activities.

 

 

 

  1. Special-purpose governments that are engaged in only one governmental-type activity are permitted to combine the fund and government-wide financial statements

 

 

 

  1. A special-purpose government engaged in business-type activities financed in whole or part by fees charged to external parties are usually reported in fiduciary funds.

 

 

 

  1. Special-purpose governments that are engaged in both governmental and business-type activities are permitted to combine the fund and government-wide financial statements.

 

 

 

  1. Special-purpose governments that are engaged in more than one governmental activity are permitted to combine the fund and government-wide financial statements.

 

 

 

 

  1. Special-purpose governments that are engaged in both governmental and business-type activities are required to use the full reporting model including MD&A, government-wide and fund-basis statements, notes to the financial statements and RSI.

 

 

 

  1. Special-purpose governments that are engaged in more than one governmental activity are required to use the full reporting model including MD&A, government-wide and fund- basis statements, notes to the financial statements and RSI.

 

 

 

  1. Special-purpose governmental entities that are engaged in a single business activity are not required to prepare government-wide financial statements, but may issue only enterprise fund statements.

 

 

 

  1. Special-purpose governmental entities that are engaged in a single governmental-type activity only are required to prepare only the statements required for governmental fund basis financial statements.

 

 

 

  1. For financial reporting purposes, governmental health care entities, public school systems, other not-for-profit entities and public colleges and universities may be considered to be special-purpose entities.

 

 

 

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

 

 

 

  1. 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.

 

 

 

 

  1. Most public colleges and universities choose to report as special purpose entities engaged in only business-type activities.

 

 

 

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

 

 

 

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

 

 

 

  1. Sometimes, but not always public colleges are included as component units in the state CAFR

 

 

 

  1. Revenue sources for public colleges include tuition and fees and donations. All other income is reported as unrelated business income.

 

 

 

  1. No public colleges have the power to issue debt; it must be issued by the state as general obligation debt.

 

 

 

  1. GASB requirements for business-type activities of public colleges requires accrual of interest and amortization of debt discount and premium.

 

 

 

  1. GASB Statement 35 extends the provisions of GASB Statement 34 to both public and private colleges and universities.

 

 

 

 

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

 

 

 

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

 

 

 

  1. Public institutions of higher education are required to produce a Statement of Cash flows in addition to a Statement of Net Assets and a Statement of Revenues, Expenses, and Changes in Net Assets.

 

 

 

  1. Tuition waived for work-study and graduate assistants is deducted from student fee revenue when preparing a Statement of Revenues, Expenses, and Changes in Net Assets.

 

 

 

  1. Tuition waived for academic and athletic scholarships is deducted from student fee revenue when preparing a Statement of Revenues, Expenses, and Changes in Net Assets.

 

 

 

  1. Higher education institutions that report as special purpose entities engaged in business- type activities only should report the same net asset classifications (invested in capital assets, net of related debt, restricted, unrestricted) as are reported in the government-wide statement of net assets.

 

 

 

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

 

 

 

  1. Governmental health care entities, public school systems, and museums are commonly accounted for as special-purpose governments.

 

 

 

 

  1. GASB Statement 39: Determining Whether Certain Organizations Are Component Units requires most public college foundations to be reported as discretely presented component units in the college’s financial reports.

 

 

 

  1. Public colleges must depreciate infrastructure and may not use the modified approach.

 

 

 

  1. Public colleges must report tuition income net of athletic scholarships.

 

 

 

  1. Public colleges who waive fees for graduate assistants must report tuition income net of the fees waived.

 

 

 

  1. Public colleges who waive fees for graduate assistants must report tuition at the gross amount and expense the fees waived.

 

 

 

  1. GASB categorizes general state appropriation as operating revenue for public colleges and universities.

 

 

 

  1. GASB categorizes general state appropriation as nonoperating revenue for public colleges and universities.

 

 

 

  1. Reimbursement grants require that the appropriate expenditure be made before the revenue can be recognized.

 

 

 

 

  1. According to GASB Statement 33, with respect to public colleges and universities, pledges receivable are recognized as assets and revenues when eligibility requirements are met.

 

 

 

  1. Public colleges and universities account for revenue bonds using the accrual method to account for interest and amortization of premiums and discounts.

 

 

 

Multiple Choice Questions

 

  1. Which of the following is an example of a special-purpose government?
    1. Village government
    2. Park district
    3. Township government
    4. City government
  2. Which of the following is not an example of a special-purpose government?
    1. Village government
    2. Tollway authority
    3. Library district
    4. Fire protection districts
  3. Which of the following would not be considered a special-purpose government for financial reporting purposes?
    1. A public school system.
    2. An art museum.
    3. A public hospital.
    4. A county board of supervisors.

 

 

 

  1. Which of the following statements is true of a special-purpose government?
    1. Special-purpose governments that are engaged in more than one governmental- type activities can combine the fund and government-wide financial statements.
    2. Special-purpose governments engaged in only one business-type activity have to prepare government-wide financial statements.
    3. Special-purpose governments that are engaged in a single governmental-type activity may combine the fund and government-wide financial statements.
    4. GASB Statement 39: Determining Whether Certain Organizations Are Component Units applies only to public educational institutions.

 

 

 

 

  1. Which of the following is not required for a special-purpose local government engaged in only fiduciary type activities?
    1. Statement of Fiduciary Net Assets
    2. Statement of Fiduciary Cash Flows
    3. Notes to the Financial Statements
    4. Required Supplementary Information other than MD&A
  2. Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to include all of the following in its financial statements except?
    1. Required supplementary Information
    2. Fund basis financial statements
    3. Government-wide financial statements
    4. None of the above, these are all required

 

  1. Which of the following is true regarding financial reporting of special-purpose entities?
    1. Special-purpose entities might be included as component units in a primary government's financial statements.
    2. Special-purpose entities that engage in a single governmental activity may prepare statements that combine government-wide and governmental fund statements.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

  1. Assume a government is a special-purpose entity engaged in fiduciary activities only. Which of the following financial statements would be required?
    1. Statement of Fiduciary Net Assets and Statement of Changes in Fiduciary Net Assets.
    2. Statement of Net Assets and Statement of Activities.
    3. Statement of Net Assets, Statement of Activities, Statement of Fiduciary Net Assets, Statement of Changes in Fiduciary Net Assets.
    4. Statement of Fiduciary Net Assets, Statement of Changes in Fiduciary Net Assets, and Statement of Cash Flows.

 

 

 

 

  1. Assume a government is determined to be a special-purpose government engaged in business-type activities only. Which of the following financial statements would be required?
    1. Balance Sheet, Statement of Revenues, Expenditures, and Changes in fund Balances.
    2. Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Net Assets, Statement of Cash Flows.
    3. Statement of Net Assets, Statement of Activities, Statement of Cash Flows.
    4. Statement of Net Assets and Statement of Activities.

 

 

 

  1. Assume a government is a special-purpose government engaged in only one governmental activity. Which financial statements would be required?
    1. Government-wide statements only.
    2. Statements combining the governmental funds and government-wide statements.
    3. Both government-wide and governmental fund basis statements.
    4. Either B or C above.

 

 

 

  1. With respect to public colleges engaged in business-type activities, which of the following is not correct?
    1. GASB requirements for business-type activities of public colleges requires accrual account for debt, include accrual of interest and amortization of debt discount and premium.
    2. Most public college foundations are required to be reported as discretely presented component units in the college’s financial report.
    3. Only amounts that are to paid by students and third-party payers can be shown as tuition and fee revenue net of any scholarship discounts and allowances.
    4. All of the above are correct
  2. Depending upon the circumstances, in practice public colleges and report as special purpose entities engaged in:
    1. business-type activities only.
    2. both governmental and business-type activities.
    3. governmental activities only.
    4. any one of the above.

 

 

 

 

  1. Which of the following is true with respect to public four-year higher education institutions (public colleges)?
    1. Sometimes, but not always public colleges are included as component units in the state CAFR
    2. Revenue sources for public colleges include tuition and fees, state appropriations and donations. All other income is reported as unrelated business income.
    3. No public colleges have the power to issue debt; it must be issued by the state as general obligation debt.
    4. Public colleges may not choose to report as special-purpose entities engaged only in business-type activities.

 

 

 

  1. Which of the following is true regarding the financial statements for special-purpose entities?
    1. Special-purpose entities that are engaged only in one governmental activity may combine government-wide and governmental fund statements.
    2. Special-purpose entities that are engaged in fiduciary activities only prepare the statements required for fiduciary funds (Statement of Fiduciary Net Assets, Statement of Changes in Fiduciary Net Assets).
    3. Both of the above.
    4. Neither of the above.

 

 

 

  1. Special purpose governments engaged only in fiduciary-type activities are required to prepare all of the following except:
    1. Statement of Fiduciary Net Assets
    2. Statement of Cash Flows
    3. Statement of Changes in Fiduciary Net Assets
    4. Management Discussion and Analysis

 

 

  1. Which of the following is true regarding financial reporting of special-purpose entities?
    1. Special purpose entities might include park districts, school districts, and public colleges and universities.
    2. Special-purpose entities, in some cases, have more limited reporting requirements than general-purpose entities.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

  1. Public colleges and universities may choose to report as:
    1. special-purpose entities engaged in governmental and business-type entities.
    2. special-purpose entities engaged in business-type activities only.
    3. either (a) or (b) depending on the nature of their operations.
    4. neither (a) nor (b).

 

 

 

  1. Public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities would have which of the following financial statements?
    1. Statement of Net Assets, Statement of Activities.
    2. Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Net Assets.
    3. Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Net Assets, Statement of Cash Flows.
    4. None of the above.

 

 

 

  1. Which of the following is true regarding the Statement of Revenues, Expenses and Changes in Net Assets for a public college reporting as a special purpose entity engaged in business type activities only?
    1. The accrual basis of accounting is used to measure revenues and expenses.
    2. Encumbrances are recorded at the time purchase orders are issued.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

 

  1. A public college had tuition and fees of $21,000,000. Scholarships, for which no services were required, amounted to $1,600,000. Graduate assistantships, for which services were required, amounted to $2,500,000. 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.

 

 

 

  1. Which of the following would be true regarding the Statement of Net Assets for a public college reporting as a special purpose entity engaged in business type activities only?
    1. A classified statement is required, separating current and long-term assets and liabilities.
    2. The net asset categories are: invested in capital assets net of related debt, restricted and unrestricted.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

  1. Which of the following is true regarding the Statement of Revenues, Expenses, and Changes in Net Assets for a public college?
    1. Tuition revenues are reported net of tuition waivers when those waivers require service on the part of the recipient student.
    2. Depreciation expense is recognized.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

  1. Which of the following is true regarding the Statement of Revenues, Expenses, and Changes in Net Assets for a public college?
    1. All student scholarship allowances should be reported as operating expenses.
    2. An all-inclusive statement should be prepared, ending with the net assets at year- end.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

 

  1. Which of the following is true regarding the Statement of Revenues, Expenses, and Changes in Net Assets for a public (government-owned) college?
    1. The accrual basis of accounting is used to determine the change in net assets.
    2. Auxiliary enterprise activities represent revenues and expenses related to units of the college that provide services to students on a user fee basis.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

  1. Which of the following is true regarding the Statement of Cash Flows for a public college?
    1. The direct method must be used.
    2. The statement is in the same format required for state and local governmental enterprise funds.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

  1. Which of the following is true regarding the Statement of Cash Flows for a public college?
    1. A reconciliation is required, reconciling operating income in the Statement of Revenues, Expenses, and Changes in Net Assets to the cash flows provided (used) by operating activities.
    2. Cash purchases of capital assets are reported as outflows in the capital related financing activities section.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

  1. Which of the following is true regarding the Statement of Cash Flows for a public college?
    1. Cash received for interest is reported as an increase in cash flows from operating activities.
    2. Cash paid for interest is reported as a decrease in cash flows from either noncapital or capital and related financing activities.
    3. Both of the above are true.
    4. Neither of the above is true

 

 

  1. Which of the following statements is true regarding accounting and financial reporting for public colleges and universities?
    1. Public colleges and universities may choose to report in the same manner as private colleges and universities, using FASB standards.
    2. Public colleges and universities may choose to report as special-purpose entities..
    3. Both of the above.
    4. Both of the above.

 

 

 

  1. A public college had tuition and fees for the year ended June 30, 2014 in the amount of

$45,000,000. Scholarships, for which no services were required, amounted to $2,500,000. 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) $40,200,000.

B) $42,700,000.

C) $42,500,000.

D) $45,000,000.

 

 

 

  1. Which of the following groups would not be considered a component unit of a special- purpose government, for the purposes of applying GASB Statement 39: Determining Whether Certain Organizations Are Component Units?
    1. A university foundation.
    2. A hospital auxiliary.
    3. A museum foundation.
    4. A high school band booster club.

 

 

 

  1. Which of the following is true regarding the Statement of Cash Flows for a public college?
    1. The indirect method must be used.
    2. The statement is in the same format required for state and local governmental enterprise funds.
    3. Both of the above are true.
    4. Neither of the above is true.

 

 

 

 

  1. Which of the following statements is (are) true regarding public colleges and universities choosing to report as special-purpose entities engaged in business-type activities only?
    1. Endowments would be reported in the Statement of Net Assets as Net Assets Restricted-Nonexpendable.
    2. Capital appropriations from state governments are shown, in the Statement of Revenues, Expenses, and Changes in Net Assets, as a category separate from revenues.
    3. Both of the above.
    4. Neither of the above.

 

 

 

  1. Public colleges and universities follow                                    guidelines while private colleges and universities follow                                                   guidelines
    1. GAO,             FASB.
    2. FASB,            GAO.
    3. FASB,            GASB.
    4. GASB,           FASB.

 

 

 

  1. Which of the following groups would not be considered a component unit of a special- purpose government, for the purposes of applying GASB Statement 39: Determining Whether Certain Organizations Are Component Units?
    1. General governments.
    2. Booster clubs.
    3. Museums.
    4. Health care entities.

 

 

 

  1. According to the National Association of College and Business Officers, scholarship discounts and allowances paid by institutional funds:
    1. Are included in tuition revenue and recorded as an expense.
    2. Are not included in tuition revenue but are included as an “other source”.
    3. Are reported as a reduction of revenue by directly reducing the revenue account or a contra- revenue account.
    4. Are reported as an adjustment to tuition revenue in the government-wide statements.

 

 

 

 

  1. Fees waived by the an educational institution in return for services to be provided by students are reported:
    1. As a reduction in tuition revenue by directly reducing the revenue account or a contra-revenue account.
    2. As an adjustment to tuition revenue in the government-wide statements.
    3. As an expense.
    4. By deducting the waived fee from tuition revenue before it is recorded.

 

 

 

  1. Which of the following is true?
    1. Tuition and fees charged are included in income and the fees waived for graduate assistants are expensed.
    2. Scholarship allowances for which no services are required are expensed.
    3. Fees waived for graduate assistantships for which services are required are deducted directly from tuition revenue.
    4. Revenues for summer sessions are recorded in deferred revenues and recorded as revenue when the semester ends.

 

 

 

  1. GASB requires that educational institutions who engage in business-type activities and issue debt account for the debt by:
    1. Recording the debt service as an expenditure as it becomes due.
    2. Recording the interest as an expense when it is due and payable.
    3. Recording the principal net of any premium or discount when the debt is issued and expense the interest as it is paid.
    4. Recording the interest expense on the accrual basis, including amortizing the premium or discount, if applicable.

 

 

 

  1. With respect to public colleges and universities, expenses are reported by:
    1. Function.
    2. Object classification.
    3. Department.
    4. Academic vs. non academic components.

 

 

 

The following information applies to the next three questions:

Tuition and fees for the Northern University was assessed at $21,000,000. Scholarship allowances, for which no services are required, were $1,700,000 and graduate assistantships, for which services are required, were $900,000.

 

  1. What is the journal entry to record tuition revenue?

A) Accounts receivable

19,300,000

 

Operating Revenue-Student Tuition & Fees

 

19,300,000

B) Accounts Receivable

20,100,000

 

Operating Revenue-Student Tuition & Fees

 

20,100,000

C) Accounts Receivable

18,400,000

 

Operating Revenue-Student Tuition & Fees

 

18,400,000

D) Accounts Receivable

21,000,000

 

Operating Revenue-Student Tuition & Fees

 

21,000,000

 

 

 

  1. What is the journal entry to record the scholarship allowances?
  1. Scholarships and Fellowships Expense

Accounts Receivable

  1. Operating Revenue Deduction –Scholarship

1,700,000

 

1,700,000

Allowances

1,700,000

 

Accounts Receivable

 

1,700,000

C) Operating Revenue Deduction –Scholarship

 

 

Allowances

1,700,000

 

Deferred Revenues

 

1,700,000

D) Not recorded because it was deducted from tuition revenue before revenue it was recorded

 

 

 

  1. What is the journal entry to record the graduate assistantships?
    1. Not recorded because it was deducted from tuition revenue before revenue it was recorded
    2. Assistantships and

Fellowships Expense

Accounts receivable

C) Operating Revenue Deduction –Scholarship

900,000

 

900,000

Allowances

900,000

 

Accounts Receivable

 

900,000

D) Operating Revenue Deduction –Scholarship

 

 

Allowances

900,000

 

Deferred Revenues

 

900,000

 

 

 

The following data applies to the next two questions.

 

  • Northern University has a fiscal year end of June 30.
  • In June 2014, tuition and fees of $1,200,000 was assessed for the summer term that runs from June 1, 2014 through August 31, 2014. $1,200,000 was collected on June 1, 2014.

 

  1. When is this revenue reportable on the financial statements for Northern?

2014

2015

A)      $ 1,200,000

0

B)      $          0

1,200,000

C)      $ 600,000

600,000

D)      $ 300,000

 

 

900,000

 

  1. What is the journal entry on June 1 for Northern?

A) Cash and Cash Equivalents                                                     1,200,000

 

Operating Revenues-Student Tuition and Fees

300,000

Deferred Revenues-Student Tuition and Fees

900,000

B) Cash and Cash Equivalents                                                         300,000

 

Cash and Cash Equivalents, Reserved                                  900,000

 

Operating Revenues-Student Tuition and Fees

300,000

Deferred Revenues-Student Tuition and Fees

900,000

C) Cash and Cash Equivalents                                                    1,200,000

 

Operating Revenues-Student Tuition and Fees

1,200,000

D) Cash and Cash Equivalents                                                   1,200,000

 

Deferred revenue

1,200,000

 

 

 

  1. Northern University received state appropriations as follows:
  • Unrestricted general purposes                                                                  $1,700,000
  • Capital outlay, set aside for specific projects                                          1,300,000 What is the journal entry to record this event?

 

    1. Cash and Cash Equivalents                                                           1,700,000 Restricted Cash and Cash Equivalents                                                           1,300,000

Operating Revenues – State Appropriations                                        1,700,000

Operating Revenues - Capital Appropriations                                      1,300,000

    1. Cash and Cash Equivalents                                                         3,000,000

Nonoperating Revenues – State Appropriations                                1,700,000 Capital Appropriations                                                                                                  1,300,000

    1. Cash and Cash Equivalents                                                         3,000,000

Nonoperating Revenues – State Appropriations                                1,700,000 Nonoperating Revenues-Capital Appropriations                                                             1,300,000

    1. Cash and Cash Equivalents                                                            1,700,000 Restricted Cash and Cash Equivalents                                                            1,300,000

Nonoperating Revenues – State Appropriations                                1,700,000 Capital Appropriations                                                                                                  1,300,000

 

 

 

Short Answer Questions

 

  1. Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to include which items in its financial reporting?

 

 

  1. The Implementation Guide for GASB Statement No. 34 provides a distinction between general-purpose governments and special-purpose governments. Discuss the difference between the two.

 

 

 

  1. List three examples (types) of general-purpose state or local governments and three special-purpose local governments.

 

 

  1. What are the required parts of the annual financial report for special-purpose local governments engaged only in business-type activities?

 

  1. What are the required parts of the annual financial reports for special-purpose governments engaged only in fiduciary-type activities?

 

 

 

  1. What are the criteria outlined in GASB Statement 39: Determining Whether Certain Organizations Are Component Units for requiring public college foundations to be reported as discretely presented components in the college’s financial reports?

 

 

 

  1. Indicate the financial reporting rules for each of the following special-purpose entities (which category of special-purpose entity), and indicate the financial statements that would be required:
  1. A township that assesses property for taxation, provides road maintenance, and provides welfare assistance.
  2. A fire protection district that engages in protection of property in unincorporated areas from fires.
  3. An independent tollway authority, not the component unit of any other government.
  4. An independent statewide pension plan.
  5. A public college.

 

 

 

  1. What is the difference between a component unit and a special purpose local government?

 

 

 

  1. Answer the following related to accounting and financial reporting for public colleges and universities:
  1. What choices exist for financial reporting by public colleges and universities, according to GASB Statement 35?
  2. Indicate the contents required for a financial report for those public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities.

 

 

Exercises

 

  1. Southeastern State University has chosen to report as a public university reporting as a special-purpose entity engaged only in business-type activities. Deferred Revenues were reported as of July 1, 2013 in the amount of $4,800,000. Record the following transactions related to revenue recognition for the year ended June 30, 2014. Include in the account titles the proper revenue classification (operating revenues, nonoperating revenues, etc.):

 

  1. Deferred revenues related to unearned revenues for the summer session, which ended in August 2013.
  2. During the fiscal year ended June 30, 2014, student tuition and fees were assessed in the amount of $68,000,000. Of that amount, $61,000,000 was collected in cash. Also, of that amount, $4,200,000 pertained to that portion of the 2014 summer session that took place after June 30, 2014.
  3. Student scholarships, for which no services were required, amounted to

$3,500,000. Students applied these scholarships to their tuition bills at the beginning of the fall and spring semesters.

  1. Student scholarships and fellowships, for which services were required, such as graduate assistantships, amounted to $2,200,000. These students also applied their scholarship and fellowship awards to their tuition bills at the beginning of each semester.
  2. Auxiliary enterprise revenues amounted to $8,300,000.
  3. The state appropriation for operations amounted to $33,000,000.
  4. The state appropriation for capital outlay amounted to $12,700,000.
  5. Gifts for endowment purposes amounted to $4,000,000. Gifts for unrestricted purposes amounted to $6,000,000. Interest income, all unrestricted, amounted to $600,000.

 

 

 

  1. Northwest State University had the following account balances as of June 30, 2014.

Debits are not distinguished from credits, so assume all accounts have a “normal” balance (i.e. cash is a debit and accounts payable a credit)

 

Accounts payable

525,000

Accounts receivable (net)

435,000

Capital assets, net of depreciation

7,400,000

Cash and cash equivalents

205,000

Cash and cash equivalents – restricted (noncurrent)

245,000

Deferred revenue-current

340,000

General obligation bonds payable - current portion (related to capital acquisition)

 

390,000

General obligation bonds payable (related to capital acquisition)

2,500,000

Inventories

710,000

Investments - Endowment

4,200,000

Investments Long-term

1,500,000

Investments Short-term -unrestricted

900,000

Net assets-restricted-expendable

1,300,000

Net assets-restricted-nonexpendable

4,400,000

Revenue bonds payable (related to capital acquisition)

2,900,000

Net Assts - Unrestricted

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Required: Prepare, in good form, a Statement of Net Assets for Northwest State University as of June 30, 2014.

 

  1. Northern State University had the following account balances for the year ended and as of June 30, 2014. Debits are not distinguished from credits, so assume all accounts have a “normal” balance.

 

Additions to permanent endowments

1,000,000

Auxiliary enterprise revenue

5,100,000

Capital grants and gifts

1,260,000

Depreciation expense

2,300,000

Employee Benefits

2,410,000

Federal grants and contracts revenue

1,350,000

Gifts

940,000

Interest on capital-related debt

800,000

Investment income

380,000

Net assets, beginning of year

19,600,000

Nonexempt wages

3,400,000

Other operating expenses

3,600,000

Salaries-exempt staff

4,100,000

Salaries-faculty

7,200,000

Scholarship tuition and fee contra revenue

800,000

Scholarships and fellowships expense

901,000

State and local grants and contracts revenue

950,000

State appropriation for operations

5,900,000

State appropriations for capital additions

1,340,000

Student tuition and fee revenue

8,600,000

 

Required: Prepare, in good form, a Statement of Revenues, Expenses, and Changes in Net Assets for Northern State University for the year ended June 30, 2014.

 

 

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