Chapter 19 Flashcards
For the summer session of 20X2, Pacific University assessed its students $1,700,000 (net of refunds) covering tuition and fees for educational and general purposes. However, only $1,500,000 was expected to be realized because scholarships totaling $150,000 had been granted to students, and tuition remissions of $50,000 had been allowed to faculty members’ children attending Pacific. What amount should Pacific include as revenues from student tuition and fees?
a. $1,500,000. b. $1,550,000. c. $1,650,000. d. $1,700,000.
a. $1,500,000.
Unrestricted net assets comprised $7,500,000 of assets and $4,500,000 of liabilities (includ- ing deferred revenues of $150,000). Among the receipts recorded during the year were unre- stricted gifts of $550,000 and restricted grants totaling $330,000, of which $220,000 was expended during the year for current operations and $110,000 remained unexpended at the close of the year.
Volunteers from the surrounding communities regularly contribute their services to Global, which normally purchases them; it pays the volunteers nominal amounts to cover their travel costs. During the year, the amount for travel paid to these volunteers aggregated to $18,000. The gross value of services performed by them, determined by reference to equivalent wages available in that area for similar services, amounted to $200,000. The university believes the contributed services enhance its assets.
At June 30, 20X1, Global’s unrestricted net asset balance was
a. $7,500,000. b. $3,150,000. c. $3,000,000. d. $2,850,000.
c. $3,000,000.
Unrestricted net assets comprised $7,500,000 of assets and $4,500,000 of liabilities (includ- ing deferred revenues of $150,000). Among the receipts recorded during the year were unre- stricted gifts of $550,000 and restricted grants totaling $330,000, of which $220,000 was expended during the year for current operations and $110,000 remained unexpended at the close of the year.
Volunteers from the surrounding communities regularly contribute their services to Global, which normally purchases them; it pays the volunteers nominal amounts to cover their travel costs. During the year, the amount for travel paid to these volunteers aggregated to $18,000. The gross value of services performed by them, determined by reference to equivalent wages available in that area for similar services, amounted to $200,000. The university believes the contributed services enhance its assets.
For the year ended June 30, 20X1, what amount should be included in Global’s revenue for the unrestricted gifts and restricted grants?
a. $550,000. b. $660,000. c. $770,000. d. $880,000.
d. $880,000.
Unrestricted net assets comprised $7,500,000 of assets and $4,500,000 of liabilities (includ- ing deferred revenues of $150,000). Among the receipts recorded during the year were unre- stricted gifts of $550,000 and restricted grants totaling $330,000, of which $220,000 was expended during the year for current operations and $110,000 remained unexpended at the close of the year.
Volunteers from the surrounding communities regularly contribute their services to Global, which normally purchases them; it pays the volunteers nominal amounts to cover their travel costs. During the year, the amount for travel paid to these volunteers aggregated to $18,000. The gross value of services performed by them, determined by reference to equivalent wages available in that area for similar services, amounted to $200,000. The university believes the contributed services enhance its assets.
For the year ended June 30, 20X1, what amount should Global record as contribution revenue for the volunteers’ services?
a. $218,000. b. $200,000. c. $18,000. d. $0.
b. $200,000.
Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for the year ended December 31, 20X3. However, Dodge did not expect to collect this amount because of contractual adjustments of $500,000 to third-party payers. In May 20X3, Dodge purchased bandages from Hunt Supply Company at a cost of $1,000. However, Hunt noti- fied Dodge that the invoice was being canceled and that the bandages were being donated. On December 31, 20X3, Dodge had board-designated assets consisting of $40,000 in cash and invest- ments of $700,000.
For the year ended December 31, 20X3, how much should Dodge report as net patient service revenue?
a. $4,500,000. b. $5,000,000. c. $5,500,000. d. $5,740,000.
a. $4,500,000.
Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for the year ended December 31, 20X3. However, Dodge did not expect to collect this amount because of contractual adjustments of $500,000 to third-party payers. In May 20X3, Dodge purchased bandages from Hunt Supply Company at a cost of $1,000. However, Hunt noti- fied Dodge that the invoice was being canceled and that the bandages were being donated. On December 31, 20X3, Dodge had board-designated assets consisting of $40,000 in cash and invest- ments of $700,000.
For the year ended December 31, 20X3, Dodge should record the donation of bandages as
a. A $1,000 reduction in operating expenses.
b. A decrease in net assets released from restrictions.
c. An increase in unrestricted revenue,gains,and other support.
d. A memorandum entry only.
c. An increase in unrestricted revenue,gains,and other support.
Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for the year ended December 31, 20X3. However, Dodge did not expect to collect this amount because of contractual adjustments of $500,000 to third-party payers. In May 20X3, Dodge purchased bandages from Hunt Supply Company at a cost of $1,000. However, Hunt noti- fied Dodge that the invoice was being canceled and that the bandages were being donated. On December 31, 20X3, Dodge had board-designated assets consisting of $40,000 in cash and invest- ments of $700,000.
How much of Dodge’s board-designated assets should be included in unrestricted net assets?
a. $0.
b. $40,000. c. $700,000. d. $740,000.
d. $740,000.
Donated medicines that a hospital normally would purchase should be recorded at fair value and should be credited directly to
a. Unrestricted revenue.
b. Expense of medicines.
c. Fundbalance.
d. Deferred revenue.
a. Unrestricted revenue.
Which of the following would normally be included as revenue of a not-for-profit hospital?
a. Unrestricted interest income from an endowment fund.
b. An unrestricted gift.
c. Tuition received from an educational program.
d. All of the above.
d. All of the above.
An unrestricted gift pledge from an annual contributor to a not-for-profit hospital made in December 20X1 and paid in March 20X2 would generally be credited to
a. Contribution revenue in 20X1.
b. Contribution revenue in 20X2.
c. Other income in 20X1.
d. Other income in 20X2.
a. Contribution revenue in 20X1.
An organization of high school seniors assists patients at Lake Hospital. These student volunteers perform services that the hospital would not otherwise provide, such as wheeling patients in the park and reading to them. Lake has no employer–employee relationship with these volunteers, who donated 5,000 hours of service to Lake in 20X2. Assuming a minimum wage of $7.50, these services would amount to $18,750, and the estimated fair value of these services was $25,000. In Lake’s 20X2 statement of operations, what amount should it report as donated services?
a. $25,000. b. $18,750. c. $6,250. d. $0.
d. $0.
Which of the following would be included in the unrestricted funds of a not-for-profithospital?
a. Permanent endowments.
b. Term endowments.
c. Board-designated funds originating from previously accumulated income. d. Funds designated by the donor for plant expansion and replacement funds.
c. Board-designated funds originating from previously accumulated income.
Depreciation should be recognized in the financial statements of
a. Proprietary (for-profit) hospitals only.
b. Both proprietary and not-for-profit hospitals.
c. Both proprietary and not-for-profit hospitals only when they are affiliated with a college or
university.
d. All hospitals, in a memorandum entry not affecting the statement of revenue and expenses.
b. Both proprietary and not-for-profit hospitals.
Which basis of accounting should a voluntary health and welfare organization use?
a. Cash basis for all funds.
b. Modified accrual basis for all funds.
c. Accrual basis for all funds.
d. Accrual basis for some funds and modified accrual basis for other funds.
c. Accrual basis for all funds.
Town Service Center is a voluntary health and welfare organization funded by contributions
from the general public. During 20X6, it received unrestricted pledges of $800,000, half of which were payable in 20X6 with the other half payable in 20X7 for use in 20X7. It was estimated that 10 percent of these pledges would be uncollectible. In addition, Ladd, a social worker on Town’s permanent staff earning $30,000 annually for a normal workload of 1,500 hours, contributed an additional 600 hours of time to Town at no charge.
How much should Town report as unrestricted contribution revenue for 20X6 with respect to the pledges?
a. $0.
b. $360,000. c. $720,000. d. $800,000.
b. $360,000.
