Accounting for Governmental and Nonprofit Entities, 18e (Reck)
1) Nongovernmental (private) colleges and universities should follow FASB standards;
governmental (public) colleges and universities should follow GASB standards.
2) Under GASB standards, public colleges and universities are considered general purpose
governments.
3) The accrual basis of accounting is used to record revenues and expenses of both public
business-type and private colleges and universities.
4) A private college would record a federal grant received to test a medical device that the federal
government intends to patent as Contributions—With Donor Restrictions.
5) Contributions with no eligibility requirement 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 and as an addition to net assets with donor restrictions by a private college or university.
6) Tuition refunds are recorded by debiting Tuition and Fees—Unrestricted.
7) A private university following the recommendations of the National Association of College and
University Business Officers (NACUBO) chart of accounts for reporting expenses must disclose
expenses by program and support function in the notes.
8) Term endowments are donor restricted resources whose principal is to be maintained intact until
the happening of a particular event or the passage of a stated period of time.
9) Earnings on a private college’s endowment investments may increase net assets without donor
restrictions or net assets with donor restrictions, or both.
10) Receipt of a $500,000 gift by a private college that must be invested, the earning of which are
to be used to support a “chaired” professorship in accounting, would be recorded as an increase in
net assets with donor restrictions.
11) An annuity agreement requires that a college pay the donor (or other designated individual) a
fixed dollar amount at specified time intervals.
12) A statement of cash flows is required by GAAP for both private colleges and universities and
public colleges and universities engaged in business-type activities.
13) Private colleges and universities report term endowments as net assets with donor restrictions
until the term has expired.
14) Public colleges and universities that use business-type reporting must present segment
information in the notes to the financial statements.
15) The Uniform Prudent Management of Institutional Funds Act (UPMIFA) applies primarily to
colleges and universities.
16) The organizational form of a college can be governmental, nongovernmental not-for-profit, or
for-profit.
17) The National Association of College and University Business Officers (NACUBO) provides
second-tier GAAP for private colleges and universities.
18) Loan assets represent loans made by a university to an external organization, and would be
recorded by debiting Investments.
19) Private colleges report intangible assets as a separate asset classification; whereas, public
colleges report intangible assets as part of the capital asset classification.
20) Both public and private universities report an infrastructure classification.
21) Colleges and universities will report tuition waivers as either a contra-revenue account or an
expense, depending on the purpose for which the waiver is given.
22) A split-interest agreement is when the university and another beneficiary share in the benefits
from a donor’s gift.
23) The Uniform Prudent Management of Institutional Funds Act specifies the spending rate a
not-for-profit should use when establishing its expenditure policies.
24) Only public colleges and universities are subject to the federal single audit requirements.
25) The college scorecard allows students and parents to assess colleges’ and universities’
performance based on metrics such as affordability and graduation rates.
26) An example of a college outcome performance metric would be performance on nationally
ranked exams such as the CPA exam.
27) Colleges and universities frequently present outcome measures rather than output measures.
28) Which of the following statements is true regarding generally accepted accounting principles
(GAAP) for colleges and universities?
A) The FASB has set standards for private and public colleges and universities from the time of its
inception in 1974.
B) The National Association of Colleges and University Business Officers (NACUBO) provides
category (b) accounting principles under the FASB GAAP hierarchy.
C) Public and private colleges and universities are subject to the requirements in the AICPA audit
and accounting guide for Not-for-Profit Entities.
D) The GASB is responsible for establishing GAAP for public colleges and universities.
29) What type of college or university must report expenses by functional classification?
A) Both private and public colleges and universities.
B) Private colleges and universities.
C) Public colleges and universities.
D) Neither private nor public colleges and universities.
30) GASB accounting and reporting standards applicable to public colleges and universities:
A) Are now the same as FASB standards to permit comparability between public and private
colleges and universities.
B) Permit public colleges and universities to use the AICPA model which differs substantially
from the reporting model used by private colleges and universities subject to FASB jurisdiction.
C) Permit public colleges and universities to optionally follow FASB standards.
D) Differ in some significant ways from FASB standards applicable to private colleges and
universities.