[Anonymous]

Hello All,

Can someone please explain the following question to me.

For the fall semester of Year 1, Ames University assessed its students $3,000,000 for tuition and fees. The net amount realized was only $2,500,000 because scholarships of $400,000 were granted to students, and tuition remissions of $100,000 were allowed to faculty members’ children attending Ames. What amount should Ames report for the period as unrestricted current fund gross revenues from tuition and fees?

a.$2,600,000

b.$2,500,000

c.$3,000,000

d.$2,900,000

Choice “c” is correct. Revenues from tuition and fees are reported at the gross amount. Only refunds are netted against the revenue. Scholarships and tuition remissions are shown separately as expenditures. The journal entry would be:

Debit (Dr) Credit (Cr)

Cash $ 2,500,000

Expenses – scholarships 400,000

Expenses – tuition remission 100,000

Revenues – tuition and fees $ 3,000,000

Why scholarships and tuition fees are included in revenue. Shouldn’t they be subtracted since both of them are expenses for us?

[leglock]

I recall that gross revenue is what tuition andfees were in their gross amount and the only deduction from this is if a class was dropped by students which naturally results in the revenue being refunded to the student and therefore not included in gross revenue. Scholarships etc do not reduce gross revenue as quirky as it seems

[Author]

Replies