Question

A private university offers graduate assistantships to qualified students each year. In exchange for the waiver oftuition, graduate assistants are required to assist faculty members with research and other activities. Assume a graduate assistant received a $4,000 tuition waiver for the current academic year. Based on these facts, the university should record A. tuition revenues of $4,000 and expenditures of $4,000. B. tuition revenues of$0 and expenditures of$0. C. tuition revenues of $4,000 and expenditures of $0. D. tuition revenues of $4,000 and a reduction of tuition revenues of $4,000.

Answer 1

Answer:

A. tuition revenues of $4,000 and expenditures of $4,000.

Explanation:

If the student is not employed as a graduate assistant required to assist faculty members with research and other activities, we will have one:

a. The student will have to pay $4,000 tuition. This is a revenue to the university.

b. The private university will employ a research assistant and pay him $4,000. This an expenditure to the university.

Therefore, this transactions have to be required as highlighted in a. and b. above to track the actual revenue and expenditure implication of the waiver despite cash does not exchange hands.