[jessanqi]

Can someone please kindly advise why the $140,000 scholarship would not be deducted from revenues??
Thank you in advances!!!

For the fall semester of 20X5, Cranbrook College, a private institution, assessed its students $2,300,000 for tuition and fees. The net amount realized was only $2,100,000 because of the following revenue reductions:

Refunds occasioned by class cancellations and student withdrawals $50,000
Tuition remissions granted to faculty members’ families $10,000
Scholarships and fellowships $140,000

How much should Cranbrook report for the period for unrestricted current fund revenues from tuition and fees?

A. $2,100,000
B. $2,150,000
C. $2,240,000
D. $2,300,000

Explanation

The correct answer is C. Tuition remissions granted to faculty members’ families and scholarships and fellowship grants should be classified as expenses of a university rather than as reductions in tuition revenue. In this way, the University can properly determine its billable tuition, and the expense related to the amount of tuition not collected because they are allowances for faculty’s families or scholarships. However, where a class is canceled, the tuition fees related to such canceled classes should be deducted from tuition revenues. When a class is not canceled, the reimbursement of tuition fees is treated as an expense and not a reduction of tuition.

Thus, Cranbrook should report as tuition revenues the full amount assessed ($2,300,000) less the amount of refunds ($50,000) and less the tuition remission to faculty members’ families ($10,000), or $2,240,000.

[Mike J]

Non-profit Accounting is different from for profit accounting. The main focus is showing that the entity is accomplishing its mission(s) versus net income.

So you will have “wash” entries sometimes to show that the NFP college is providing the service of education (its mission).

If the mission is not being achieved (eg class cancellation), then the NFP reduces a revenue account–your Question.

[jessanqi]

so I think the college should just reduce the $50,000. why it also reduce the $10,000 tuition remission??

Thank you!!!!

[jessanqi]

anyone can kindly help???

Thank you in advance!!!

[Anonymous]

I'm just curious, are they now testing less on government/nonprofit in the new version? I think the percentages of questions on those areas have decreased but I haven't heard anyone specifically mention it. The days of “My test felt like it was half government/nonprofit” may be gone now, not sure. With fewer MCQ, that's probably the case. I only remember working a few practice SIMs in those areas, and it seems like they were so long and involved that to ask something like that on FAR would leave about 9 out of 10 people in the dust….although that's probably what they want.

[Accountingbeans]

I'm tripped up on this concept as well. In Becker I believe it said just refunds are deducted? The cancelled classes make sense to me but not sure about the rest. I thought in the NINJA audio Jeff said that scholarships are deducted against revenue

Newbie
BEC- August 31

[Accountingbeans]

Could anyone explain this further? Thank you

Newbie
BEC- August 31

[Author]

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