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SOLUTIONS
UNIVERSITY AT ALBANY
Rockefeller College of Public Affairs and Policy
PAD-501: Financial Management
Final Examination
Professor Purtell
Spring – 2010
Name: ________________________________________________
Class Day ____________________________________________________
As a courtesy to your classmates, please turn off cell phones and pagers.
INSTRUCTIONS
1. PRINT your name clearly on every page of this exam and put your initials at the
2. You may use a calculator and one page of notes. All other books and materials
3. You have the full three-hour period to complete the exam. That should be more than
4. If you get stuck on any one question, move on, and come back to it later if you
5. International students may refer to a dictionary.
6. If something is not clear, ask for clarification.
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Part II (50 points): The following questions do not relate to the ASO’s financial
statements.
1. 2 points. What is the fundamental accounting equation for a nonprofit
organization? How does it differ from the equivalent equation for a governmental
2. 2 points. Under modified accrual accounting, borrowing money results in
3. 4 points. Choose from the list of terms below to answer the following questions.
Use as many of the choices as are necessary to fully answer each of the questions.
i. measurable
ii. funds have been collected
iii. paid
iv. goods are delivered
v. there is an obligation to pay
vi. available
vii. paid out of measurable funds
viii. paid out of available funds
ix. earned
x. delivered
xi. resources are used
xii. resources have already been paid for
a. (1 point) Revenue is recognized under modified accrual accounting when
it is?
b. (2 points) Expenditures are recognized under modified accrual accounting
when?
c. (1/2 point) Expenses are recognized under accrual account when?
d. (1/2 point) Revenue is recognized under cash accounting when?
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Grading: each missing element minus ½ point.
4. 3 points. The Town of Guilderland sent $40,000,000 of real-estate tax bills to its
residents. It expects to collect $36,000,000 of that total during fiscal year 2010-11
and to collect 65% of the remainder within 45 days of the end of the fiscal year.
How should the town record that transaction in its governmental general fund? Be
sure to identify the balance sheet categories in the fundamental equation of
accounting each component of the transaction relates to. Be sure to show all of the
calculations you used in the transaction.
7. 6 points. The Greater Bethlehem Habitat for Humanity (GBHH), a not-for-profit
organization, started its fiscal year on June 1st 2009 with 12,000 sheets of drywall
in its warehouse. During the year, GBHH acquired and used drywall to finish
houses as shown on the table below. When answering the questions below, be
sure to show all of your work.
a. If GBHH uses LIFO to account for its inventory, what was its inventory
expense on May 31st 2010?
b. What was the value of the drywall remaining in GBHH’s inventory as of
June 1st 2010 using LIFO?
c. What would the value of the ending inventory have been if GBHH used
FIFO to value its inventory? Hint: you do not need to calculate the FIFO
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expense to find the ending inventory value. Be sure to show all of your
work.
Units Unit Cost
Beginning Inventory 12,000 $8.00
Acquired 6/20/2009 16,000 $9.00
Acquired 2/12/2010 14,000 $7.00
Acquired 5/30/2010 3,000 $9.00
Total Inventory 45,000
Used 6/09 to 8/09 8,000
Used 9/09 to 12/09 14,000
Used 1/10 to 4/10 16,000
Used 5/10 3,000
8. 3 points. At the start of fiscal year 2010, GBHH acquired power saws, drills, and
pneumatic nail guns AT A cost of $35,614.58. GBHH financed the entire
purchase price using a five-year, 4%, fully-amortizing loan from Friendly
Neighborhood Bank with annual payments of $8,000 per year made on the last
day of each fiscal year. Those annual payments include all interest and principal
due on the loan. At the end of five years GBHH will owe Friendly Neighborhood
Bank nothing.
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a. How much of the loan should GBHH record on its balance sheet as short
term on the first day of fiscal year 2010?
b. How much of the loan should GBHH record on its balance sheet as long
term on the first day of fiscal year 2010?
c. How much should GBHH budget for interest expenses during fiscal year
2010?
9. 12 points. Record the transactions below for Imaginary Medical Center (IMC), a
nonprofit organization. Be sure to identify the balance sheet categories and
1. (2 points) Bills totaling $550,000 were sent to patients for services
delivered during the year. $50,000 of those bills was deemed to be
2. (1 point) $500,000 of the amount billed to patients was collected.
3. (1 point) Medical supplies totaling $80,000 were ordered and received. A
4. (1 point) Salaries and wages accrued by the end of the year were
5. (1 point) During the year, a total of $310,000 of wages was paid to
6. $25,000 of the uncollectible accounts receivable from previous years were
7. (1 point) $70,000 of the supplies were used
8. (2 points) On the first day of the fiscal year, IMC bought medical
equipment valued at $50,000 and paid for it in cash. The equipment has a
9. (2 points) During the fiscal year, IMC repaid $4,000 of the principal due
on its long term debt and paid $1,000 of interest on those loans.
SOLUTIONS
Grading Guidelines:
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10. 15 points. Based on the transactions in problem 9 and the beginning-balance
information in the list of balance sheet accounts in the table below, use the
worksheet to prepare:
a. (5 points) A comparative balance sheet for IMC as of the end of the fiscal
year.
b. (5 points) An activity statement for IMC for the full fiscal year.
c. (5 points) A cash-flow statement for IMC for the full fiscal year.
Each of the statements must be properly formatted.
Beginning Balances
Cash
$70,000
Accounts receivable
$20,000
Wages Payable
$20,000
Long Term Note
$30,000
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Allowance for Uncollectible A/R
$5,000
Unrestricted Net Assets
$35,000
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