PAD-501 Initials ________ 1
SOLUTIONS
UNIVERSITY AT ALBANY
Rockefeller College of Public Affairs and Policy
PAD-501: Financial Management
Final Examination
Spring – 2008
Name: ________________________________________________
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.
PAD-646 Initials _______ 2
2
Part I: Financial Statement Analysis (50 points)
Questions 1 to 18 refer to the audited 2006 financial statements of The Albany
Jewish Community Center (AJCC).
1. 1 point. Did the auditors issue a qualified or an unqualified opinion of the AJCC’s
financial position? What is the source of the information?
2. 4 points. On a percentage basis, did member accounts receivable grow faster or
slower than member revenues between fiscal years 2005 and 2006? Support your
answer with the appropriate calculations? Where did you find the information?
3. 2 point. Does AJCC have any capital lease obligations beyond fiscal year 2006?
What was the interest rate on the capital leases in fiscal year 2006?Support your
answer? Where did you find the information?
4. 2 point. What method of depreciation does AJCC use? What were its depreciation
expenses for fiscal year 2006? Support your answer with the appropriate numbers
from the statements. Where did you find the information?
5. 1 points. Can you tell how much AJCC spent on “Special Events” in fiscal years
2005 and 2006? Where did you find the information? Support your answer with
the appropriate numbers from the statements.
No – special event are reported net of expenses
6. 5 points. What was AJCC’s program expense ratio for fiscal years 2005 and
2006? Where did you find the information? Support your answer with the
appropriate numbers from the statements. Is the trend favorable or unfavorable?
Program expense ratio = program expenses / total expenses
7. 1 points. Did AJCC include all of the costs associated with its programs in its
estimates of program expenses? Where did you find the information? Support
your answer.
NO – only expenses directly attributable to program activities were
8. 2 points. What were the two largest components of AJCC’s program expenses for
fiscal years 2005 and 2006? Support your answer with the appropriate numbers
from the statements. Where did you find the information?
9. 6 points. Did AJCC’s current ratio increase or decrease between fiscal years 2005
and 2006? Support your answer with numbers from the financial statements.
Where did you find the information? Are the ratios above or below the rule of
thumb for the current ratio? Is the trend favorable or unfavorable?
10. 1 point. Based on your knowledge of GAAP, should all of AJCC’s investments
have been categorized as current assets? Briefly, support your answers.
PAD-646 Initials _______ 4
4
11. 5 points. Did AJCC’s profit margin improve or get worse between fiscal years
2005 and 2006? Support your answer with numbers from the financial statements.
Where did you find the information?
12. 2 points. What was the total value of AJCC’s endowment as of December 31,
2006? How much of the endowment was restricted? Where did you find that
information? Support your answer with the appropriate numbers from the
statements.
13. 2 points. How much of AJCC’s endowment funds had been lent to the operating
funds as of December 31, 2006? Could that amount have been transferred from
the endowment to the operating funds without a loan. Explain why. Support your
answer with the appropriate numbers from the statements. Where did you find the
information?
14. 3 points. Which of AJCC’s programs were not self supporting during fiscal year
2006? Where did you find the information to answer the question? Support your
answer with the appropriate numbers from the statements.
PAD-646 Initials _______ 5
5
15. 1 points. What was the largest contributor to AJCC’s program service fees for
fiscal year 2006? Where did you find the information. Support your answer with
the appropriate numbers from the statements.
16. 5 points. How much did AJCC’s operating cash flow increase or decrease
between fiscal years 2005 and 2006? Outside of the change in net assets and
depreciation, what was the two largest sources of operating cash flow for fiscal
year 2006? Where did you find the information? Support your answer with the
appropriate numbers from the statements.
Decrease of 171,618 (-70.8%) from 242,348 in 2005 to 70,730 in 2006
17. 5 points. How much did investment earnings add or subtract from the total change
in net assets for AJCC in fiscal year 2006? Support your answer with the
appropriate numbers from the statements. Where did you find the information?
Can AJCC count on that happening in fiscal year 2007? Support your answer
using information in the statements.
18. 2 points. What were the amounts of net assets released from restrictions in fiscal
years 2005 and 2006? Where did you find the information? Support your answer
with the appropriate numbers from the statements.
PAD-646 Initials _______ 6
Part II (50 points): The following questions do not relate to the AJCC financial
statements.
1. 1 point. What is the fundamental accounting equation for a government funds
balance sheet?
Assets = liabilities + fund balance
2. 5 points. The Town of Colonie sent $8,400,000 of real-estate tax bills to its
residents on the first day of its fiscal year. It expects to collect the $2,000,000 in
each of the four quarters of the year and $200,000 of the remainder within 60 days
after the end of the fiscal year. The remaining $100,000 represents uncollectible
taxes. All revenue is recorded in the Town’s General Fund.
a. How would that revenue be recorded on the Colonie’s government-wide
financial statements?
b. How would it be recorded in Colonie’s General Fund?
c. Are the numbers different? Why?
a) increase
b) decrease
c) stay the same
d) can not tell from the information given
4. 3 points. The Albany County government would recognize expenditures when.
(choose from the selections below)
PAD-646 Initials _______ 7
7
5. 2 points. Revenue will be recognized under modified accrual accounting when it
7. 1 point. Long-term prepaid expenses are referred to as ______ deferred charges
________?
8. 1 point. Both governments and nonprofits report the value of marketable
9. 4 points. The Schenectady Police Department contracted with the City’s Repair
Garage (an internal service fund) for repairs on three of its cruisers. The total cost
for the repairs was $3,500. When the repairs were completed, the City Garage
billed the Police department for the work. The police department sent the Garage
$2,000 in cash for the repairs. Three months later, the Police department sent the
Repair Garage the remaining $1,500 it owned them. Record the transaction for the
final payment from the perspective of both the Police and the Garage.
10. 10 points. The Albany Community Center runs an adult-education center. One of
the most popular activities at the Center is a program of painting classes. The
center includes stretched canvases for each class. The center started fiscal year
2007 with 100 canvases on hand at a cost of $5 each. During the year, it bought
100 canvases on March 1st at $6.00 each, June 1st at 6.50, and August 1st at 6.75.
In addition, an art supply store went out of business on December 20th of the year
and the Center bought its entire inventory of 600 canvases for $3.00 each. The
center used 100 canvases during February, May and July. (ID that periodic
method of inventory is used, not perpetual)
a. Under LIFO what was the Center’s inventory expense and the value of its
remaining inventory on December 31st 2007?
b. What would the inventory expense and the value of its remaining
inventory on December 31st 2007 using FIFO?
PAD-646 Initials _______ 8
8
11. 5 points. Record the transactions below for the Albany Community Center, a
nonprofit organization.
a. On January 1, 2007, six families purchased five-year memberships to the
Center at a cost of $1,000 each.
b. On April 1, 2007, the Center collected $100,000 on a grant it received
during fiscal year 2006.
c. On June 1, 2007, the center purchased 100 canvases at a cost of $6.50
each. The canvas supplier sent the Center a bill for the amount due.
d. On July 1, 2007, 100 seniors registered for art classes. The center received
tuition payments of $25 from 60 of the seniors for the art classes held that
month and sent invoices to the remainder of the seniors.
e. On December 31, 2007, the six families that purchased five-year
memberships had been using the Center for a full year.
12. 15 points. Using the information in the journal for the Albany Arts Foundation on
the following page, prepare comparative balance sheets, activity statements and a
cash-flow statement for the Foundation. Journal info not provided.
PAD-646 Initials _______ 9
9
PAD-646 Initials _______ 10
10