Select the best answer for each of the following multiple-choice items. (Nos. 2–10 are AICPA adapted.)

1. Which of the following is required as part of the complete set of financial statements for a private college or university?

a. Statement of changes in financial position
b. Statement of activities
c. Statement of revenues, expenses, and changes in net assets
d. None of the above

2. Financial resources of a college or university that are currently expendable at the discretion of the governing board and that have not been restricted externally and are nondesignated by the board for a specific purpose should be reported in the balance sheet as

a. board-designated current funds.
b. permanently restricted net assets.
c. unrestricted net assets.
d. temporarily restricted net assets.

3. Funds received by a private college from donors who have stipulated that the principal is nonexpendable but the income generated may be expended for current operating needs would be accounted for as

a. contributions—permanently restricted.
b. contributions—temporarily restricted.
c. contributions—unrestricted.
d. fund balance increases.

4. An alumnus donates securities to Rex Private College and stipulates that the principal be held in perpetuity and revenues be used for faculty travel. Dividends received from the securities should be recognized as revenues in

a. endowment funds.
b. quasi-endowment funds.
c. restricted current funds.
d. unrestricted current funds.

5. A private college’s plant funds group includes which of the following subgroups?

(1) Renewals and replacement funds
(2) Retirement of indebtedness funds
(3) Restricted current funds

a. 1 and 2
b. 1 and 3
c. 2 and 3
d. None of the above

6. The following funds were among those held by Olmstead College at December 31, 2019:

What amount should Olmstead College classify as permanently restricted endowments?

a. $1,400,000
b. $300,000
c. $400,000
d. $700,000

7. At the end of the year, Cramer Private University’s balance sheet comprised $15,000,000 of assets and $9,000,000 of liabilities (including deferred revenues of $300,000). What is the balance of Cramer’s net assets?

a. $5,700,000
b. $6,000,000
c. $6,300,000
d. $15,000,000

8. In the loan fund of a private or public college, each of the following types of loans would be found except

a. faculty loans.
b. computer loans.
c. staff loans.
d. student loans.

9. In 2019, Public State University’s board of trustees established a $300,000 fund to be retained and invested for scholarship grants. In 2019, the fund earned $10,000, which had not been disbursed at December 31, 2019. What amount should Public State report as unrestricted investment earnings at December 31, 2019?

a. $0
b. $300,000
c. $10,000
d. $310,000

10. On January 2, 2019, a graduate of Marimount Private College established a permanent trust fund and appointed Wells Bank as the trustee. The income from the trust fund is to be paid to Marimount and used only by the School of Business to support student scholarships. What entry is required on Marimount’s books to record the receipt of cash from the interest on the trust fund?

a. Debit Cash and credit Deferred Revenues
b. Debit Cash and credit Temporarily Restricted Endowment Revenues
c. Debit Cash and credit Unrestricted Endowment Revenues
d. Debit Cash and credit Temporarily Restricted Contributions