How Would a Private College or University Report Its Estimate

question 22

Multiple Choice

How would a private college or university report its estimate for uncollectible tuition and fees on its statement of activities?

• A) A contra-revenue account titled Provision for Doubtful Accounts.
• B) A direct reduction of Tuition and Fees-Unrestricted.
• C) An operating expense titled Provision for Doubtful Accounts.
• D) An operating expense titled Bad Debt Expense.

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Definitions:

Income Stream

A series of regular payments or revenues generated over time from investments, work, or business activities.

Dividend Preference Theory

A theory suggesting that investors prefer dividends from current earnings over potential capital gains because of the perceived certainty of dividend payments.

Bird in Hand

A theory in finance that suggests investors prefer the certainty of dividend payments to the potential for future capital gains.

PE Ratio

The Price to Earnings Ratio, a metric used to evaluate the valuation of a stock by dividing its current share price by its earnings per share.