Advanced Accounting Ch. 11 & Ch. 19

If 1 British pound can be exchanged for 180 cents of U.S. currency, what fraction should be used to compute the indirect quotation of the exchange rate expressed in British pounds?

1/1.8

Unrestricted gifts and endowment income of a private university are reported as

unrestricted revenues on the statement of activities.

A private, not-for-profit hospital received the following restricted contributions and other receipts during the year ended December 31, 20X8: (1) For research $300,000 (2) For equipment acquisitions $200,000 (3) Income from endowment to be used for new addition to hospital plant $1,000,000 None of the contributions or other receipts were expended during the ended December 31, 20X8. For the year ended December 31, 20X8, what amount would be reported on the hospital's statement of changes in net assets as an increase in temporarily restricted net assets?

$1,500,000

A private, not-for-profit hospital received the following restricted contributions and other receipts during the year ended September 30, 20X5: For research $250,000 For equipment acquisitions $400,000 Income from endowment to be used for new addition to hospital plant $875,000 None of the contributions or other receipts was expended during the year ended September 30, 20X5. For the year ended September 30, 20X5, what amount would be reported on the hospital's statement of changes in net assets as an increase in temporarily restricted net assets?

$1,525,000

On December 5, 20X8, Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR), to be paid on January 10, 20X9. The transaction is denominated in Saudi riyals. Imperial's fiscal year ends on December 31, and its reporting currency is the U.S. dollar. The exchange rates are: December 5, 20X8 1 riyal = $0.265 December 31, 20X8 1 riyal = 0.262 January 10, 20X9 1 riyal = 0.264 Based on the preceding information, what was the overall foreign currency gain or loss on the accounts payable transaction?

$100 gain

Healing Angel Hospital, operated by a religious organization, billed patients $13,000,000 for services rendered during the year ended June 30, 20X3. The hospital realized cash of $10,700,000 from the patient billings because of the following reductions: (1) contractual adjustments of $1,400,000 granted to private insurance companies and to the federal government; and (2) uncollectible accounts receivable of $900,000. On the statement of operations prepared for the year ended June 30, 20X3, Healing Angel Hospital should report net patient service revenue of:

$11,600,000.

A private, not-for-profit hospital received a donation of medicine from the XYZ Pharmaceutical Company on March 15, 20X9. The cost of the medicine to the company was $66,000, and its market value was $110,000. Twenty percent of the medicine was used by the hospital during the year ended June 30, 20X9. On the hospital's statement of operations for the year ended June 30, 20X9, the contribution of medicine would increase operating revenues by

$110,000.

Heavy Company sold metal scrap to a Brazilian company for 200,000 Brazilian reals on December 1, 20X8, with payment due on January 20, 20X9. The exchange rates were: December 1, 20X8 1 real = $0.5435 December 31, 20X8 1 real = 0.5192 January 20, 20X9 1 real = 0.5305 Based on the preceding information, what is the Heavy's overall net gain or net loss from its foreign currency exposure related to this transaction?

$2,600 loss

Suppose the direct foreign exchange rates in U.S. dollars are: 1 Singapore dollar = $0.7025 1 Cyprus pound = $2.5132 Based on the information given above, how many U.S. dollars must be paid for a purchase of citrus fruits costing 10,000 Cyprus pounds?

$25,132

For the year ended June 30, 20X9, a university assessed its students a total of $4,000,000 for tuition and fees. Included in this amount was $300,000 of tuition remissions awarded to graduate teaching assistants, and $150,000 of scholarships awarded to undergraduate students. Tuition and fees totaling $3,550,000 were collected during the year ended June 30, 20X9. What amount should be reported in the unrestricted fund as net revenue from tuition and fees for the year ended June 30, 20X9?

$3,850,000

Good Faith Hospital, operated by a religious organization, billed patients $4,000,000 for services rendered during the year ended June 30, 20X9. The hospital realized cash of $3,500,000 from the patient billings because of the following reductions: (1) contractual adjustments of $140,000 granted to private insurance companies and to the federal government; and (2) uncollectible accounts receivable of $360,000. On the statement of operations prepared for the year ended June 30, 20X9, Good Faith Hospital should report net patient service revenue of:

$3,860,000.

Suppose the direct foreign exchange rates in U.S. dollars are as follows: 1 Swiss franc = $1.0371 1 Swedish krona = $0.1526 Based on the information given above, how many U.S. dollars must be paid for a purchase of goods costing 20,000 Swedish krona?

$3.052

Highland Company sold goods to an Egyptian company for 350,000 Egyptian pounds on December 6, 20X3, with payment due on January 15, 20X4. The exchange rates were as follows: December 6, 20X3 1 Egyptian pound = $0.1593 December 31, 20X3 1 Egyptian pound = $0.1612 January 15, 20X4 1 Egyptian pound = $0.1604 Based on the preceding information, what is Highland's overall net gain or net loss from its foreign currency exposure related to this transaction?

$385 gain

Mint Corporation has several transactions with foreign entities. Each transaction is denominated in the local currency unit of the country in which the foreign entity is located. On November 2, 20X8, Mint sold confectionary items to a foreign company at a price of LCU 23,000 when the direct exchange rate was 1 LCU = $1.08. The account has not been settled as of December 31, 20X8, when the exchange rate has increased to 1 LCU = $1.10. The foreign exchange gain or loss on Mint's records at year-end for this transaction will be:

$460 gain

Mint Corporation has several transactions with foreign entities. Each transaction is denominated in the local currency unit of the country in which the foreign entity is located. On October 1, 20X8, Mint purchased confectionary items from a foreign company at a price of LCU 5,000 when the direct exchange rate was 1 LCU = $1.20. The account has not been settled as of December 31, 20X8, when the exchange rate has decreased to 1 LCU = $1.10. The foreign exchange gain or loss on Mint's records at year-end for this transaction will be:

$500 gain

A private, not-for-profit hospital received a donation of medicine from the Xengen Pharmaceutical Company on February 13, 20X2. The cost of the medicine to the company was $34,000, and its market value was $76,000. Thirty percent of the medicine was used by the hospital during the year ended June 30, 20X2. On the hospital's statement of operations for the year ended June 30, 20X2, the contribution of medicine would increase operating revenues by

$76,000.

Suppose the direct foreign exchange rates in U.S. dollars are as follows: 1 Swiss franc = $1.0371 1 Swedish krona = $0.1526 Based on the information given above, the indirect exchange rates for the Swiss franc and the Swedish krona (from a U.S. perspective) are

0.9642 Swiss francs and 6.5531 Swedish krona respectively.

Suppose the direct foreign exchange rates in U.S. dollars are: 1 Singapore dollar = $0.7025 1 Cyprus pound = $2.5132 Based on the information given above, the indirect exchange rates for the Singapore dollar and the Cyprus Pound (from a U.S. perspective) are:

1.4235 Singapore dollars and 0.3979 Cyprus pounds respectively.

Suppose the direct foreign exchange rates in U.S. dollars are: 1 Singapore dollar = $0.7025 1 Cyprus pound = $2.5132 Based on the information given above, how many Singapore dollars are required to purchase goods costing 10,000 US dollars?

14,235

Suppose the direct foreign exchange rates in U.S. dollars are as follows: 1 Swiss franc = $1.0371 1 Swedish krona = $0.1526 Based on the information given above, how many Swiss francs are required to purchase goods costing $5,000 U.S.?

5,186

A private university received $2,640,000 from student tuition and fees for the year 20X6 summer session. The session began on May 16, 20X6, and ended on July 15, 20X6. The university's fiscal year end is June 30. According to the AICPA College and University Audit Guide, how should the university report the $2,640,000 of receipts in its financial statements for the year ended June 30, 20X6?

Current revenue of $2,640,000.

A private university received $280,000 from student tuition and fees for the year 20X9 summer session. The session began on June 20, 20X9, and ended on July 30, 20X9. The university's fiscal year end is June 30. According to the AICPA College and University Audit Guide, how should the university report the $280,000 of receipts in its financial statements for the year ended June 30, 20X9?

Deferred revenue of $280,000.

A private not-for-profit university generally must depreciate all tangible fixed assets, except: I. works of art and other historical treasures. II. administration buildings.

I only

In a university, class cancellation refunds of tuition and fees should be recorded as: I. a reduction of revenue from tuition and fees. II. a reduction of accounts receivable.

I only

Net assets restricted as to time or purpose should be classified as: I. temporarily restricted. II. permanently restricted.

I only

On the statement of operations prepared for a private, not-for-profit hospital, patient service revenue earned during the year is reported net of amounts for which of the following items? I. Contractual adjustments II. Bad debts expense

I only

A private, not-for-profit university should prepare which of the following financial statements? I. statement of financial position. II. statement of activities. III. statement of changes in fund balances. IV. statement of cash flows. V. statement of changes in financial position.

I, II, and IV.

The term "restricted" as used in university accounting refers to a constraint on the use of funds which has been: I. internally imposed. II. externally imposed.

II only

Bridger Hospital, which is operated by a religious organization, provides charity care for the indigent living in the region served by the hospital. How should Bridger report the amount of its charity care on its financial statements?

In the notes to the financial statements only.

Clay University, a not-for-profit university, earned $300,000 from bookstore revenue and spent $100,000 for faculty research in 20X1. The $100,000 for faculty research came from a $150,000 research grant received in the previous year. What is the effect of these events on unrestricted net assets in 20X1?

Increase $300,000

Sayer University, a not-for-profit university, earned $750,000 from bookstore revenue and spent $250,000 for faculty research in 20X8. The $250,000 for faculty research came from a $400,000 research grant received in the previous year. What is the effect of these events on unrestricted net assets in 20X8?

Increase $750,000

Upon arrival in Chile, Karen exchanged $1,000 of U.S. currency into 480,000 Chilean Pesos. While returning after her two month visit, she exchanged her remaining 50,000 Pesos into $100 of U.S. currency. What amount of gain or a loss did Karen experience on the 50,000 pesos she held during her visit and converted to U.S. dollars at the departure date?

Loss of $4.

A private, not-for-profit hospital expended $35,000 of temporarily restricted assets to acquire equipment. What account should be debited in the hospital's plant replacement and expansion fund as a result of the acquisition of the equipment?

Net Assets Released—Plant Acquisition.

A private, not-for-profit hospital received contributions of $50,000 from donors on June 15, 20X9. The donors stipulated that their contributions be used to purchase equipment for the hospital. As of June 30, 20X9, the end of the hospital's fiscal year, $12,000 of the contributions had been spent on equipment acquisitions. In the hospital's general fund, what account would be credited to recognize the release of the restrictions on the temporarily restricted contributions used to acquire equipment?

Net assets released from equipment acquisition restriction

Highland Company sold goods to an Egyptian company for 350,000 Egyptian pounds on December 6, 20X3, with payment due on January 15, 20X4. The exchange rates were as follows: December 6, 20X3 1 Egyptian pound = $0.1593 December 31, 20X3 1 Egyptian pound = $0.1612 January 15, 20X4 1 Egyptian pound = $0.1604 Based on the preceding information, which of the following is true of the dollar's movement vis-à-vis the Egyptian pound during the period? December 6 - 31 January 1 - 15 A. Dollar weakened Dollar strengthened B. Dollar weakened Dollar weakened C. Dollar strengthened Dollar strengthened D. Dollar strengthened Dollar weakened

Option A

On December 5, 20X8, Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR), to be paid on January 10, 20X9. The transaction is denominated in Saudi riyals. Imperial's fiscal year ends on December 31, and its reporting currency is the U.S. dollar. The exchange rates are: December 5, 20X8 1 riyal = $0.265 December 31, 20X8 1 riyal = 0.262 January 10, 20X9 1 riyal = 0.264 Based on the preceding information, what journal entry would Imperial make on December 31, 20X8, to revalue foreign currency payable to equivalent U.S. dollar value? A. Accounts Payable (SAR) 300 Foreign Currency Transaction Gain 300 B. Accounts Payable (SAR) 100 Foreign Currency Transaction Gain 100 C. Foreign Currency Transaction Loss 300 Accounts Payable (SAR) 300 D. Foreign Currency Transaction Loss 200 Accounts Payable (SAR) 200

Option A

On September 3, 20X8, Jackson Corporation purchases goods for a U.S. dollar equivalent of $17,000 from a Swiss company. The transaction is denominated in Swiss francs (SFr). The payment is made on October 10. The exchange rates were: September 3: 1 Swiss franc = $0.85 October 10: 1 Swiss franc = 0.90 What entry is required to revalue foreign currency payable to U.S. dollar equivalent value on October 10? A. Foreign Currency Transaction Loss 1,000 Accounts Payable (SFr) 1,000 B. Accounts Payable (SFr) 850 Foreign Currency Transaction Gain 850 C. Foreign Currency Transaction Loss 850 Accounts Payable (SFr) 850 D. Accounts Payable (SFr) 1,000 Foreign Currency Transaction Gain 1,000

Option A

Chicago based Corporation X has a number of importing transactions with companies based in UK. Importing activities result in payables. If the settlement currency is the British Pound, which of the following will happen by changes in the direct or indirect exchange rates? Direct Exchange Rate Indirect Exchange Rate Increases Decreases Increases Decreases A. NA NA NA NA B. Loss Gain Gain Loss C. Loss Gain NA NA D. Gain Loss Loss Gain

Option B

On March 1, 20X8, Wilson Corporation sold goods for a U.S. dollar equivalent of $31,000 to a Thai company. The transaction is denominated in Thai baht. The payment is received on May 10. The exchange rates were: March 1: 1 baht = $0.031 May 10: 1 baht = 0.034 What entry is required to revalue foreign currency payable to U.S. dollar equivalent value on May 10? A. Accounts Receivable (baht) 93 Foreign Currency Transaction Gain 93 B. Accounts Receivable (baht) 3,000 Foreign Currency Transaction Gain 3,000 C. Foreign Currency Transaction Loss 3,000 Accounts Receivable (baht) 3,000 D. Sales 93 Foreign Currency Transaction Gain 93

Option B

Corporation X has a number of exporting transactions with companies based in Vietnam. Exporting activities result in receivables. If the settlement currency is the US dollar, which of the following will happen by changes in the direct or indirect exchange rates? Direct Exchange Rate Indirect Exchange Rate Increases Decreases Increases Decreases A. Loss Gain NA NA B. Loss Gain Gain Loss C. NA NA NA NA D. Gain Loss Loss Gain

Option C

Chicago based Corporation X has a number of exporting transactions with companies based in Sweden. Exporting activities result in receivables. If the settlement currency is the Swedish Krona, which of the following will happen by changes in the direct or indirect exchange rates? Direct Exchange Rate Indirect Exchange Rate Increases Decreases Increases Decreases A. Loss Gain NA NA B. Loss Gain Gain Loss C. NA NA NA NA D. Gain Loss Loss Gain

Option D

Heavy Company sold metal scrap to a Brazilian company for 200,000 Brazilian reals on December 1, 20X8, with payment due on January 20, 20X9. The exchange rates were: December 1, 20X8 1 real = $0.5435 December 31, 20X8 1 real = 0.5192 January 20, 20X9 1 real = 0.5305 Based on the preceding information, which of the following is true of dollar's movement vis-à-vis Brazilian real during the period? Dec 1 - 31 Jan 1 - 20 A. Dollar weakened Dollar strengthened B. Dollar weakened Dollar weakened C. Dollar strengthened Dollar strengthened D. Dollar strengthened Dollar weakened

Option D

On December 5, 20X8, Texas based Imperial Corporation purchased goods from a Saudi Arabian firm for 100,000 riyals (SAR), to be paid on January 10, 20X9. The transaction is denominated in Saudi riyals. Imperial's fiscal year ends on December 31, and its reporting currency is the U.S. dollar. The exchange rates are: December 5, 20X8 1 riyal = $0.265 December 31, 20X8 1 riyal = 0.262 January 10, 20X9 1 riyal = 0.264 Based on the preceding information, what journal entry would Imperial make on January 10, 20X9, to revalue foreign currency payable to equivalent U.S. dollar value? A. Accounts Payable (SAR) 300 Foreign Currency Transaction Gain 300 B. Accounts Payable (SAR) 100 Foreign Currency Transaction Gain 100 C. Foreign Currency Transaction Loss 100 Accounts Payable (SAR) 100 D. Foreign Currency Transaction Loss 200 Accounts Payable (SAR) 200

Option D

Which rule-making body is currently setting standards of financial reporting for private not-for-profit universities and for public (governmental) universities? Private Universities Public Universities A. FASB FASB B. GASB GASB C. GASB AICPA D. FASB GASB

Option D

In accordance with ASC 958, contributions from donors which are to be permanently invested should be disclosed on the statement of activities of a private university as an increase in:

Permanently restricted net assets.

In 20X1, Ellen College, a private not-for-profit institution, received a $100,000 grant for faculty research. The grant money was not spent until 20X2. For 20X1, Ellen College should report the contribution as:

Temporarily restricted asset.

Good Care Hospital, which is operated by a religious organization, received contributions of $1,000,000 from donors who stipulated that the cash be used to construct an addition to the hospital. As of the balance sheet date, none of the contributions had been expended for construction. On the hospital's balance sheet, the cash contributions would be disclosed in which of the following classes of net assets?

Temporarily restricted net assets

In a private, not-for-profit hospital, which fund would record cash and investments which have been restricted by the governing board for acquisitions of equipment and construction of a new hospital addition?

The general fund.

The governing board of Samaritan Hospital, which is operated by a religious organization, designated $500,000 of cash for future expansion of the hospital. On the hospital's balance sheet, the cash designated for future plant expansion would be disclosed in which of the following classes of net assets?

Unrestricted net assets

The statement of financial position for a private not-for-profit college should show separate dollar amounts for

Unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

A private college received an offer from a CPA who is an alumnus to teach a one-semester advanced accounting course at no cost. ASC 958 prescribes that this contribution of service:

be recorded as a revenue with an equivalent amount recorded as an expenditure.

A private, not-for-profit hospital uses a fund structure which includes a general fund and donor restricted funds. The hospital's revenues from nursing programs and gift shops should be accounted for in the:

general fund.

The governing board of a hospital operated by a religious organization designated $3,000,000 of cash to be used for plant expansion. The cash was invested in stocks and bonds which earned $250,000 of dividend and interest income. The income from investments should be reported on the hospital's statement of operations as an increase in:

operating income.

Assume that a private university collects tuition and fees at the beginning of summer school, in which two weeks are offered in the first fiscal year and the remaining six weeks are offered in the second fiscal year. According to the approach recommended by the National Association of College and University Business Officers (NACUBO), the university would:

recognize revenue in the first fiscal period for two-eighths of the tuition and fees and record six-eighths of the collections as a deferred revenue.

A not-for-profit private college in Virginia created a separate foundation responsible for obtaining financial support from alumni and others. Foundation assets are used for the benefit of the college. Donations made to the foundation and subsequently transferred to the college should be:

recognized as revenues by the foundation when received and as expenses by the foundation when transferred.

A private, not-for-profit hospital uses a fund structure which includes a general fund and donor restricted funds. Contributions received from donors for research to be conducted by the hospital should be accounted for in the:

specific purpose fund.

A private, not-for-profit hospital received a cash contribution of $100,000 from Samantha Hicks on November 14, 20X8. Ms. Hicks specified the money be used to acquire equipment. On December 31, 20X8, the hospital had not expended any of Ms. Hicks' contribution. On the statement of changes in net assets for the year ended December 31, 20X8, the hospital should report the contribution as a $100,000 increase in

temporarily restricted net assets.

For the year ended June 30, 20X9, a private college received contributions from alumni which were restricted for faculty research stipends to be awarded during the next fiscal year. For the year ended June 30, 20X9, these contributions should be disclosed on the statement of activities of the private college as an increase in:

temporarily restricted net assets.

A private university offers graduate assistantships to qualified students each year. In exchange for the waiver of tuition, graduate assistants are required to assist faculty members with research and other activities. Assume a graduate assistant received a $4,000 tuition waiver for the current academic year. Based on these facts, the university should record

tuition revenues of $4,000 and expenditures of $4,000.

Unrestricted current funds of a private university designated by the governing board for a specific future purpose should be reported as part of:

unrestricted net assets.

According to ASC 958, the statement of financial position of a private university should report the excess of the university's assets over its liabilities as:

unrestricted, temporarily restricted, and permanently restricted net assets.

All restricted funds of private, not-for-profit hospitals account for resources:

whose use is restricted by the donor.