When a Private College or University Has a Foundation,and That

question 115

Multiple Choice

When a private college or university has a foundation,and that foundation receives contributions specifically directed for the benefit of the college or university,

• A) The college or university records no revenue until monies are received from the foundation
• B) At the time of the contribution to the foundation, the college or university records an increase in net assets and unearned revenue. When the money is received the unearned revenue is reduced and revenue is recorded.
• C) The college or university must recognize its interest in the contribution as an asset and revenue at the same time as the foundation.
• D) None of the above

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Definitions:

Accounts Payable

Liabilities representing the amount a company owes to creditors for purchases made on credit.

Cash Inflow

Money entering a business, typically from operations, investments, or financing activities.

Cash Outflow

Refers to the payment of money in the form of cash or cash equivalents by a business for various purposes, including operating expenses, investment activities, and financing activities.

Direct Method

A way of presenting a cash flow statement where major classes of gross cash receipts and payments are disclosed, providing insight into the sources and uses of cash.