13 Chapter Health Care Providers and Colleges and Universities TRUE/FALSE
1. The statement of financial position of a not-for-profit health care organization
should distinguish among unrestricted, temporarily restricted, and permanently
restricted net assets. 2. Unlike businesses, not-for-profit health care providers
often serve patients who they know will be unable to pay any portion of the
amounts billed. 3. Private not-for-profit colleges and universities are subject to
the same FASB standards as other notfor-profit entities. 4. Restricted funds of a
not-for-profit nursing home are not available for current use; however, the income
earned on the funds is available. 5. Charity care provided by a health care
organization would be recorded in a contra-revenue account. 6. In a not-for-profit
health care organization, the cost of malpractice must be accrued if it is either
probable that impairment has occurred or if the amount of loss can be reasonably
estimated. 7. In a public university setting, general administration and sponsored
research are examples of revenues classified by source. 8. Long lived assets
held by public universities are carried at cost, or fair value if donated. 9.
Investments of a public college must be reported at fair value. 10. Prepaid health
care plans that earn revenue from agreements to provide service record revenue
when services are rendered. 11. Tuition revenue should be reported net of tuition
discounts and scholarships. 12. In accounting for colleges and universities,
related entities should either be disclosed in the Notes to the Financial
Statements or reported as component entities, depending on the degree of
control and economic interest. 13. Under GASB 39, colleges and universities are
required to bring their affiliated medical organizations into their financial reports.
ch13 Page 1 MULTIPLE CHOICE (CHAPTER 13) 1. Financial statements for
Smith College, a church-supported college, should be prepared according to
standards set by a) AICPA. b) FASB. c) GASB. d) Smith may choose any of the
above. 2. For a not-for-profit hospital, which of the following financial statements
is NOT required? a) Statement of financial position. b) Statement of activities. c)
Statement of cash flows. d) Statement of functional expenses. 3. For a not-for-
profit college or university, which of the following categories of net assets is NOT
appropriate in its external financial statements? a) Unrestricted net assets. b)
Temporarily restricted net assets. c) Permanently restricted net assets. d) None.
All of the above are appropriate. 4. Katerah College, a private college, received a
$1 million donation. The donor specified that the principal of her gift could never
be used for program activities but the earnings on the principal must be used to
provide scholarships to academically qualified students in the business school.
The $1 million gift would increase which of the following categories of net assets?