Question

Which of the following statements most accurately reflects how federal sponsored research funds awarded to a university are to be recorded?

A) Universities should record federal research funds awards as exchange transactions.
B) The terms of a federal sponsored research funds award should dictate whether funds are recorded as an exchange or nonexchange transaction.
C) Universities should record federal research funds awards as nonexchange transactions.
D) Universities with an established policy on classifying federal sponsored research funds awards as exchange transactions should record federal sponsored research fund awards as exchange transactions.

Answer 1

The terms of the federal sponsored research funds award should determine how funds are recorded.

Step-by-step explanation:

The most accurate statement regarding the recording of federal sponsored research funds awarded to a university is option B) The terms of a federal sponsored research funds award should dictate whether funds are recorded as an exchange or nonexchange transaction.

When a university receives federal research funds, the terms of the award will determine whether it should be recorded as an exchange (a transaction with equal value given and received) or a nonexchange (a transaction where only one party receives value) transaction. The classification is based on the specific requirements and restrictions outlined in the award.