In 2017, a Public University Was Awarded a Federal Reimbursement

question 36

Multiple Choice

In 2017, a public university was awarded a federal reimbursement grant of $18 million to carry out research.Of this, $12 million was intended to cover direct costs and $6 million to cover overhead.In a particular year, the university incurred $4 million in allowable direct costs and received $3.4 million from the federal government.It expected to incur the remaining costs and collect the remaining balance in 2018.For 2017 it should recognize revenues from the grant of

• A)$3.4 million
• B)$4.0 million
• C)$6.0 million
• D)$18.0 million

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Definitions:

Financial Intermediation

The process by which financial institutions act as intermediaries between lenders and borrowers.

Institutional Investor

A business organization that buys and sells securities. Generally, a fund of some kind such as a mutual fund or a pension fund that invests the pooled money of its clients.

Pension Funds

Investment pools that collect and invest funds contributed by sponsors and beneficiaries to provide future pension benefits.

Insurance Companies

Businesses that provide protection against financial losses in exchange for regular payments from individuals or entities.