Finance Test 5 | Finance

3 key differences between Strategic Planning & Operational Planning:

3 key differences between Strategic Planning & Operational Planning:
1. Planning Horizon: Strategic planning is for the next 3-10 years and operational planning is for the next year and has day-to-day management plan that is implemented in accordance to t

Purpose of Strategic Interpretations:

Purpose of Strategic Interpretations:
1. Interpret the mission statement with attention to changes in community needs & healthcare industry.
2. Prioritizes organizational purposes (in case of conflict with operations)
3. Actions of executive management re

7 factors used to Determine the direction of the local market

Determine the direction of the local market by analyzing:
a. Demographics/ Socioeconomics of primary & secondary service areas and their present & future utilization patterns.
b. Key economic & employment indicators.
c. Patient migration patterns to deter

Define SWOT analysis

SWOT analysis is used for internal analysis----identifies weakness and strengths of the organization. It helps to identify opportunities for additional market penetration with existing or new programs and threats from competition.

Define Strategic Thrusts

Strategic Thrusts/ goals= broad statements of significant results that organization aims to achieve in relation to the vision.

3 Benefits of Strategic Plans if not too specific:

Benefits of Strategic Plans if not too specific:
1. Provides process & time frame for strategic decisions
2. Creates framework for budget, capital budget, and operating plan
3. Integrates mission/vision/goals/ objectives/procedures/methods/ plans/ rules.

5 Traits of Good Policies:

5 Traits of Good Policies:
1. Consistent with primary & secondary objectives
2. Flexible so can be applied to normal & abnormal circumstances
3. Should be stated in writing with clear purposed & intent and accepted by subordinates
4. Consistent with all o

Druker's Management by Objectives: (MBO) :Method of developing Departmental objectives:
List the 3 objectives

Druker's Management by Objectives: (MBO) :Method of developing Departmental objectives:
1. Manager provides subordinates with overall yearly work plan
2. Subordinates create objectives
3. Objectives negotiated till agreement finalized.

Good Procedures

Good Procedures are derived from policies but are more specific. They result from how best to accomplish the intent of the policy. They provide managers with consistent performance appraisals.

3 Advantages of Druker's Management by Objectives

MBO Advantages: ----
1.Improves motivations,
2 reduces conflict, clarifies standards for controls & performance,
3. directs activity toward organizational goals.

Define BUDGETING:

BUDGETING:
1. Converts operational plan into monetary plans for planning purposes
2. Used as control standard to measure the performance of subordinates
3. Used to educate nonfinancial staff on the financial well-being of the organization.

5 Contents of the Budget Manual:

Contents of the Budget Manual:
a. Strategic plan
b. Budget calendar
c. Organization chart
d. Budget assumptions
e. Budget forms/ instructions.

Pros & Cons of Top-down budgeting

Top-down budgeting= senior management develops budget
i. Advantage: senior management can objectively view the future
ii. Disadvantage= implementation is difficult without input from subordinates.

Pros & Cons of Bottom-up Budgeting

Bottom-up budgeting= subordinates develop the budget:
i. Advantage=commitment to budget by subordinates
ii. Disadvantage= subordinates may not be in the best position to see future.

6 Ways Production Units are Used by Departments:

6 Ways Production Units are Used by Departments:
a. Basis for projecting volumes for budgeting purposes.
b. Measure & evaluate department productivity
c. Serve as basis for calculating the procedure cost.
d. Calculation of charges for procedures
e. Measur

Delphi technique

Delphi technique= information gathered from group of dispersed experts with limited interaction and anonymity of expert opinions; techinique for determining which expert is correct.

Delbecq Techniques

Delbecq technique (nominal group process)= group of experts meet face-to-face for discussion of forecasts.

Payback Period Analysis

Payback Period Analysis
i. Definition= number of years needed for cash flows to recover original investments; easy to use and does not account for the effects of time & money:

Legislation Effects on Capital Growth:

Legislation Effects on Capital Growth:
a. Certificate of need (CON) legislation passed by federal government did little to slow capital growth.
b. Capital costs were reimbursed based on cost so capital growth unaffected by Medicare prospective payments se

Net Present Value

Net Present Value
i. Definition=
ii. NPV equal to zero means the capital expenditure is generating discounted cash flows
iii. Positive NPV= expenditure is generating discounted cash in excess of the amount needed to repay the original investment
iv. Negat

Internal Rate of Return

Internal Rate of Return
i. Superior to using NPV
ii. Definition= discount rate of capital expendiures where discounted cash flows equal the expenditures's original investment or the discount rate where NPV is zero.

Two federal government policies lead to an increase in debt financing amongst HCO:

Two federal government policies lead to an increase in debt financing amongst HCO:
a. Medicare reimbursed 100% of interest on debts (reduced the risk of debt financing).
b. Nixon Administration allowed tax-exempt bonds which increased debt financing
c. De

5 Advantages of leasing:

Advantages of leasing:
a. Flexibility
b. More financing options for other equipment
c. Protection esp technology changes
d. Better maintence
e. Capital leases provide the same tax advantages as purchasing (for profits only)

Two types of Leases:

Two types of Leases:
a. Operating leases= periods less than equipment's useful life
b. Capital leases=periods equal to equipment's useful life

How much debt an organization can incur?

How much debt an organization can incur?
Long-term debt-to net assets= long-term debt/ net assets
****Ratio less than 1 = acceptable

How many times an organization can pay its princepal and interest expenses in operating expenses?

How many times an organization can pay its princepal and interest expenses in operating expenses?
Debt service coverage=
(Revenue-expense) + interest expense+ Depreciation expense/ (Interest expense + Princeple Payment)
****Higher Number= more adverse con

What creates the need to have financial accounting formation be a requirement?

Statement of cash flows
1. The requirement to provide financial accounting information is driven by the need for outside investors to have reliable information regarding the financial status of an organization.
2. However, the information presented in fin

Define Conservatism

Conservatism
i. When HCO must forecast a number, they take the most conservative route. Relating to volumes and revenue, the conservative means underestimating when in doubt. As related to expenses, overstating the expense when in doubt.

How are discounts, charity care, and bad debt losses reported?

E. In reporting revenues, note how the following categories are handled:
i. Discounts (not reported as revenue)
ii. Charity care (not reported as revenue)
iii. Bad debt losses (reported, but expensed later)

How are net patient service revenues represented in the statement of operations?

I. In 1990, there was a change to GAAP that directed hospitals to show the net patient service revenues as the first line in the statement of operations.
i. To get to net patient service revenues, hospitals had to get to gross patient revenue and deduct c

What are 2 ways that expenses are classified?

A. Expenses represent the resources used to create revenues--they are the costs of doing business. Like revenues, expenses do not necessarily reflect cash outlays
i. Natural classification, such as salaries, supplies, research, and so on.
ii. Functional c

Define Supplies Expense

C. Supplies expense represents the cost of expendable (primarily medical) materials.
i. The dollar amount shown represents the amount consumed, not the amount purchased.
ii. Supply stocks are reported on the balance sheet

Define Insurance Expense

D. Insurance expense represents the cost of commercial insurance purchased to protect the clinic against several risks, including:
i. Property risks (fire, weather)
ii. Liability Risks (Managerial malfeasance, medical liability)

Operating income is an indirect measure of what?

Operating income is an indirect measure of efficiency

Define non-operating income

1. Nonoperating incomes= income derived from activities that are not subject to the mission statement and may be subject to taxation even in nonprofit hospital

How is charity care reported?

HFMA has required hospitals to report charity care as costs and it is anticipated that there will be a GAAP change along those lines in future.

Define Contractual Allowance Policy.

Contractual allowance policy
i. The difference between charge and what the HCO has agreed to via contract from third party carrier.
ii. Contractual allowance do not need to be itemized. The major third party agreements must be identified in the note

What does the revenue reported represent?

ii. Note that the revenue reported does not represent the amount of cash collected:
1. Some portion has not yet been collected. The uncollected portion will appear on the balance sheet in an account titled receivables.
2. In addition, some revenues report

Difference between gross patient service revenue and net patient service revenue?

Difference between gross patient service revenue and net patient service revenue
iv. Gross Patient Service Revenue= (charges) X (volumes)
v. Net patient service revenue= deductions for charity care and contractual allowances; the amount that the HCO expec

How are discounts from charges are reported in the statement of operations?

Discounts from charges in statement of operations
1. Discounts from charges are contractual allowances that are discussed in the notes to the statement of operations. While the actual amounts are not required by GAAP, major third-party agreements are requ

How is Charity care reported in the Statement of Operations?

Charity care & Statement of Operations:
1. Charity Care is identified in the notes to the financial statements. Charity care should include the policy for providing charity care and the amount of charity care given out by the organization. Those amounts c

How is bad debt reported in statement of operations?

Bad debt & Statement of operations
1. Bad Debt is reported as operating expenses. That amount is viewed as charges for bad debt. At the point in time, HCO provided the service and expected to get charges but not the cost of service.
2. Whereas in reportin

What is the most important piece of information on the statement of cash flows?

What is the most important piece of information on the statement of cash flows?
i. Cash flow from operations considered to be under the direct control of management

List the 3 key process steps of Financial Analysis.

15. Financial Analysis---3 key process steps:
A. Establish the facts in organization
i. (using audited financial statement vs. unaudited financial statements)
B. Compare the facts over time (horizontal or trends) and to facts in similar organization (comp

Define Average collection period

Average collection period:
1. Net receivables divided by net patient services revenues divided by 365 or daily net patient services revenue
2. Aka net accounts recievables
3. Measure of how long the average patient or payor takes to pay the bill after dis

Define Days Cash-on-Hand

Days Cash-on Hand:
1. How long an organization can meet its obligations if cash receipts were interrupted.
a. Higher values indicate liquidity

Define Operating margin ratio

Operating margin ratio:
1. Derived by diving operating income by total operating revenue
2. Reflects profits from only operations
3. Higher values indicate profitability

Define Total margin ratio

Total margin ratio:
1. Excess of revenues over expenses divided by total operating revenue, including investments. (aka excess margin revenue)
2. Excess of revenue over expenses would include non-operating revenue, including investment income
3. Higher va

List 7 factors that affect the organization's internal control

Several factors can greatly impact, both positively and negatively, an organization's internal control
1. Management or governing board's philosophy and operating style
2. The organizational structure
3. The functioning of the governing board and its comm

5 things that an effective accounting system will do?

Effective Accounting System will:
i. Identify and record all valid transactions
ii. Classify financial transactions on timely basis
iii. Value these financial transactions in appropriate manner
iv. Identify the time period which these financial transactio

List the 5 control procedures that assumes that organizational objectives will be achieved.

A. Control procedures are policies and procedures, in addition to the control environment and accounting system, which have been established to provide reasonable assurance that specific organizational objectives will be achieved.
i. Proper authorization

How is Accounts Receivables performance measured?

How do we measure AR performance?
a. Collection period ratio or the days in accounts receivables is the typical way of measuring AR performance

Why does Accounts Receivables performance vary between organizations?

2. Why does AR performance vary between organizations?
a. Varies for variety of reasons including ownership of the organization, location of organization, payor mix within patient of the organization, and management's philosophy on collecting money due to

What can we do to improve AR performance?

What can we do to improve AR performance?
a. Every step in AR cycle can be improved including collecting deductibles and copays on the front end and improved billing and processing

Which statement is true?
a. GAAP rules regulate the reporting format and content for managerial accounting
b. FASB an d the AICPA provide GAAP as guidelines for preparing financial statements
c. Non-profit organzations are not required to follow the GAAP

The matching principle, which is central to accrual accounting, has two components. Which is correct?
a. revenues of a business be matched with the accounting period during which they are earned and requires that an organization's expenses be matched, to

Semi-fixed Costs:
a. Are costs that fluctuate between multiple volume ranges
b. Are fixed costs that fluctuate independent of volume
c. are variable costs that fluctuate due to volume
d. are variable costs that not related to volume

Semi-fixed Costs:
a. Are costs that fluctuate between multiple volume ranges
b. Are fixed costs that fluctuate independent of volume
c. are variable costs that fluctuate due to volume
d. are variable costs that not related to volume
Answer A:
Semi-fixed c

Although they are not always broken out separately on the income statement, costs directly related to providing services are considered operating costs. Which of the following is not considered an operating cost:
A. Salaries
B. Supply costs
c. Radiology e

Net present value is commonly used financial analysis for capital expenditures that relies on discounting cash flows. Of the following, which does not Correct concerning NPV?
a. An NPV of zero mean that the capital expenditures are generating discounted c

Which of the following is not an advantage to leasing over buying for capital projects?
a. More flexibility
b. More protection from technology changes
c. More expensive
d. Better maintenence

Which of the following is not an advantage to leasing over buying for capital projects?
a. More flexibility
b. More protection from technology changes
c. More expensive
d. Better maintenence
C: More expensive for lessor to build in potential loss and/or o

Direct Contraction is the practice of large employers contracting directly with integrated delivery systems. Which of the following best describes the strategy used by healthcare organization to accomplish reorganization and function as an integrated deli

The asset turnover ration is measuring:
a. To determine profitability
b. Resource needed to generate a dollar of revenue
c. To calculate the economic cost to the organization
d. Effectiveness of capital investment

The asset turnover ration is measuring:
a. To determine profitability
b. Resource needed to generate a dollar of revenue
c. To calculate the economic cost to the organization
d. Effectiveness of capital investment
Answer A: The asset turnover ratio is cal

Accounting concept " Going concern" means:
a. Assets should be valued based on the current market value
b. Assets should be valued on the basis of their on-going business
c. Short term events is pivotal for going concern assumption
d. Assets should be rea

Which of the following is NOT an operating indicator for measuring financial performance related to operations?
a. average length of stay
b. occupancy rate
c. outpatient revenue as percentage average patient revenue
d. FTE's per occupied bed

Which of the following is NOT an operating indicator for measuring financial performance related to operations?
a. average length of stay
b. occupancy rate
c. outpatient revenue as percentage average patient revenue
d. FTE's per occupied bed
C: outpatient

Which of the following statements is not true:
a. Current assets include cash and other assets that are expected to be converted into cash within one accounting period
b. Current assets are one factor that makes up the liquidity of the organization
c. Org

A Plan where provider assumes risk and accepts a fixed monthly dollar amount for agreed upon health care services prior to implementation is called:
a. Fee-for-service
b. diagnosis related group
c.Case rate
d. capitation

A Plan where provider assumes risk and accepts a fixed monthly dollar amount for agreed upon health care services prior to implementation is called:
a. Fee-for-service
b. diagnosis related group
c.Case rate
d. capitation
D= capitation= premium per member

Purpose of the finance system include all of the following except:
a. record & report transactions that change the value of the firm
b. Assist operations in setting and achieving cost and revenue improvements
c. Plan operational projects for the organizat

which is not one of Moody's top 5 reasons for upgrades/downgrades?
a. financial performance
b. market share and physician composition
c. CEO compensation
d. Cash flow and funding capital expenditures

which is not one of Moody's top 5 reasons for upgrades/downgrades?
a. financial performance
b. market share and physician composition
c. CEO compensation
d. Cash flow and funding capital expenditures
C= answer

T/F
The 3 most important financial statements in financial accounting are the income statement, balance statement, and statement of cash flows

true
The 3 most important financial statements in financial accounting are the income statement, balance statement, and statement of cash flows

Primary advantages to leasing verse purchasing does not include:
a. flexibility
b. more expensive
c. routine maintenance included
d. Tax advantages for for profits

Primary advantages to leasing verse purchasing does not include:
a. flexibility
b. more expensive
c. routine maintenance included
d. Tax advantages for for profits
B= One of the primary advantage of leasing is that more funds are available for other capit

Purpose of the finance system include all but one of the following:
a. record and report transactions that change of the value of the firm
b. Assist operations in setting and achieving cost and revenue improvements
c. Assist governance in short and long-t

The preparation and presentation of financial accounting data is based on a set of principles. Which ones are not part of the financial accounting data set of principles?
a. Accounting entity & going concern
b. Accounting period & objectivity
c. Ratio ana

The amont of case required to support operations for the period of delay in collecting revenue is known as:
a. Capital surplus
b. Transactions costs
c. Expenditure budget
d. Working capital

The amont of case required to support operations for the period of delay in collecting revenue is known as:
a. Capital surplus
b. Transactions costs
c. Expenditure budget
d. Working capital
D= Working capital

Liabilities represent claims against assets. Failure to meet claims have serious consequences for HCO such as bankruptcy and closure. Which of the following typically represents the largest claim against assets for HCO?
A. workers
b. vendors
c. creditors

Personel, supplies, and equipment are examples of:
a. service transactions
b. resource transactions
c. General ledger transactions
d. Depreciation

Personel, supplies, and equipment are examples of:
a. service transactions
b. resource transactions
c. General ledger transactions
d. Depreciation
B-answer

What are the unit cost of an additional or eliminated unit of service?
a. marginal cost
b. variable cost
c. semi-variable cost
d. fixed cost

What are the unit cost of an additional or eliminated unit of service?
a. marginal cost
b. variable cost
c. semi-variable cost
d. fixed cost
A. marginal cost

What is the process that estimates price equivalents and supports detailed cost reporting, budgeting improvements, and control?
A. Activity-based costs
b. Marginal Cost
c. Variable cost
d. Overhead analysis

What is the process that estimates price equivalents and supports detailed cost reporting, budgeting improvements, and control?
A. Activity-based costs
b. Marginal Cost
c. Variable cost
d. Overhead analysis
A= Activity-based costs

Term for patient who are expected to pay but unable to do so:
a. charity care
b. bad debt
c. non-operating revenue
d. DRG

Term for patient who are expected to pay but unable to do so:
a. charity care
b. bad debt
c. non-operating revenue
d. DRG
b. bad debt

The following is an example of an audit "clean bill of health"
a. unqualified opinion
b. qualified opinion
c. adverse opinion
d. GAAP opinion

The following is an example of an audit "clean bill of health"
a. unqualified opinion
b. qualified opinion
c. adverse opinion
d. GAAP opinion
A. Unqualified opinion

Each of the following can be used to measure the performance of the financial activity of the organization:
a. Collection of revenue and management of liquid assets
b. Technical quality of information & reporting
c. CEO compensation
d. Cost for which fina

Which of the following is not part of financial accounting?
a. income statement
b. balance sheet
c. Cost of goods sold
d. Statement of Cashflow

Which of the following is not part of financial accounting?
a. income statement
b. balance sheet
c. Cost of goods sold
d. Statement of Cashflow
C= Cost of good sold

Which of the following statement are false:
a. Successful not-of-profit organization have increased their equity in the recent years
b. long-term debt financing represents 25% of a typical community hospital assets
c. Leveraging the ratio of debt to equit

The following are the 4 major categories of assets except:
a. account payable
b. long-term investment
c. current assets
d. property and equipment

The following are the 4 major categories of assets except:
a. account payable
b. long-term investment
c. current assets
d. property and equipment
A= answer

Non-for-profit organizations carry large amounts of long-term investments and its often called:
a. other assets
b. accumulated depreciation
c. next fixed assets
d. funded deprectiation

Non-for-profit organizations carry large amounts of long-term investments and its often called:
a. other assets
b. accumulated depreciation
c. next fixed assets
d. funded deprectiation
D= answer

In Ratio analysis, what is the best predictor of financial failure?
a. long-term debt to net assets
b. cash flow to debt
c. debt service coverage
d. net asset financing

In Ratio analysis, what is the best predictor of financial failure?
a. long-term debt to net assets
b. cash flow to debt
c. debt service coverage
d. net asset financing
B= answer

The goodwill of the balance sheet tells the readers that the price paid for the acquisition was higher than book value of the assets acquired. Goodwill is recorded as an intangible asset on the balance sheet under:
a. Current asset
b. long-term debt
c. Pr

The weakness of the current ratio as measure of liquidity lies in :
a. inability to exactly evaluate current liabilities
b. difficulty in predicting the performance of money markets
c. It does not reflect the liquidity of the current assets
d. Income stat

Which of the following is not true regarding managerial accounting:
a. designed for use by managers
b. uses organization and sub-unit data
c. required to adhere to external standards (GAAP)
d. is primarily forward-looking

Which of the following is not true regarding managerial accounting:
a. designed for use by managers
b. uses organization and sub-unit data
c. required to adhere to external standards (GAAP)
d. is primarily forward-looking
C= not true. Only financial accou

Typical financial analyses for capital expenditures do not include which of the following?
a. payback period analysis
b. NPV
c. DRG formula
d. Internal Rate of Return (IRR)

Typical financial analyses for capital expenditures do not include which of the following?
a. payback period analysis
b. NPV
c. DRG formula
d. Internal Rate of Return (IRR)
C= answer

What does liquidity ratio signify in terms of the organization's financial position?

What does liquidity ratio signify in terms of the organization's financial position?
short term liquidity position

What does profitability ratio signify in terms of the organization's financial position?

What does profitability ratio signify in terms of the organization's financial position?
ability to grow & service

What does asset efficiency ratio signify in terms of the organization's financial position?

What does asset efficiency ratio signify in terms of the organization's financial position?
Efficiency

What does corporate structure signify in terms of the organization's financial position?

What does corporate structure signify in terms of the organization's financial position?
Long-term liquidity position

Within in the system of primary & subsidiary accounts, accounts are classified as the following except:
a. permanent accounts
b. contra accounts
c. cash accounts
c. temporary accounts

Within in the system of primary & subsidiary accounts, accounts are classified as the following except:
a. permanent accounts
b. contra accounts
c. cash accounts
c. temporary accounts
C= cash accounts

Which of the following is not a section on the statement of cash flows:
a. cash flow from operating activity
b. cash flow from investing activity
c. long term debt
d. cash flow from financing activity

Which of the following is not a section on the statement of cash flows:
a. cash flow from operating activity
b. cash flow from investing activity
c. long term debt
d. cash flow from financing activity
C= long-term debt reported on the right side of the ba

Revenue from capitated patients is typically referred to as:
a. other revenue
b. revenue from operations
c. non-operating revenue
d. premium revenue

Revenue from capitated patients is typically referred to as:
a. other revenue
b. revenue from operations
c. non-operating revenue
d. premium revenue
D= answer

Which of the following does not impact the difference between Financial Accounting and Managerial Accounting?
a. Who is the ultimate user of the information (internal vs. external)
b. How much money is involved
c. the level of data being evaluated : organ

When using the indirect method of determining net cash from operations which of the following income items is not an adjustment to net income
a. depreciation
b. change in accounts payable
c. change in long term investments
d. change in accrued expenses

When using the indirect method of determining net cash from operations which of the following income items is not an adjustment to net income
a. depreciation
b. change in accounts payable
c. change in long term investments
d. change in accrued expenses
Lo

Asset turnover ration is an indicator of how efficiently an organization is using its assets to generate revenues. In 2005, Company ABC reported high asset turnover ration. Which of the following rations will help us confirm that Company ABC is truly effi

Concept of internal allocation of cost between areas of responsibility is called:
a. cost shifting
b. transfer pricing
c. interdepartmental costing
d. marginal allocation

Concept of internal allocation of cost between areas of responsibility is called:
a. cost shifting
b. transfer pricing
c. interdepartmental costing
d. marginal allocation
B= transfer pricing

Which type of ration analysis will give the best indication of an organization's ability to survive and grow by measuring the relationship of revenues to expenses?
a. capital structure ration
b. liquidity ratio
c. asset efficiency ratio
d. profitability r

Which of the following best describes the contribution margin?
a. difference between the per unit revenue and the fixed cost rate
b profit projection that uses assumed values for volume, prices & costs
c. the estimate of volume needed to break even in pro

Which of the following would not be an appropriate strategy of providers when choosing to direct contract?
A. increase market power
b. limit capacity by service & geography to contain costs
c. increase financial capacity to accept capitated contracts
d. i

P& L statement was developed to best serve which of the following:
a. GAAP
b. decision making at governing board level
c. decision making at community level
d. decision making at manager level

P& L statement was developed to best serve which of the following:
a. GAAP
b. decision making at governing board level
c. decision making at community level
d. decision making at manager level
D= answer

Which of the following are section/categories of assets on a balance sheet?
a. current assets
b. long-term investments
c. long-term debt
d. other assets
e. property & equipment

Which of the following are section/categories of assets on a balance sheet?
a. current assets
b. long-term investments
c. long-term debt
d. other assets
e. property & equipment
C= long-term debt

The difference between total current assets and total current liabilities is called:
a. liquidity
b. marketable securities
c. long-term debt
d. net working capital
e. net assets

The difference between total current assets and total current liabilities is called:
a. liquidity
b. marketable securities
c. long-term debt
d. net working capital
e. net assets
D= answer

Marketable securities represent short-term investments in highly liquid, low-risk securities such as:
a. money market mutual funds
b. US treasury bills
c. Cash in commercial checking accounts
d. Prime commercial paper
e. bank saving account

Marketable securities represent short-term investments in highly liquid, low-risk securities such as:
a. money market mutual funds
b. US treasury bills
c. Cash in commercial checking accounts
d. Prime commercial paper
e. bank saving account
C= Cash in com

Which of the following is not commonly reported expense categories?
a. medical supplies
b. interest expense
c. charitable expense
d. depreciation
e. provisions for bad debt
f. Purchased medical services

Which of the following is not commonly reported expense categories?
a. medical supplies
b. interest expense
c. charitable expense
d. depreciation
e. provisions for bad debt
f. Purchased medical services
c. charitable expense

Which of the following describes Accrual basis accounting?
a. simple & easy to understand
b. closely aligned to accounting for tax purposes
c. records expenses in the period of the year which they occur
d. typically used by medical practices

Which of the following describes Accrual basis accounting?
a. simple & easy to understand
b. closely aligned to accounting for tax purposes
c. records expenses in the period of the year which they occur
d. typically used by medical practices
C= answer....

Which of the following are not true re: NPV?
a. NPV can be used to identify whether or not expenditure will generate sufficient discounted cash-flows to provide a profit
b. NPV can be used to identify which of two investments will provide the greatest ret

T/F
Whenever a fixed or semi-variable resource is used at less than capacity, the marginal unit cost is exactly equal to variable cost

TRUE
Whenever a fixed or semi-variable resource is used at less than capacity, the marginal unit cost is exactly equal to variable cost

Which of the following is not one of the 3 basic causes of increased risk?
a. poor prior management has reduced the organization's financial capacity
b. using the financial plan and budget guidelines effectively
c. too large a fraction of proposals are fu

Operating budgets are composed of which of the following:
a. income and expense budget
b. forecasts of financial statements
c. cash flow budget
d. revenue budget

Operating budgets are composed of which of the following:
a. income and expense budget
b. forecasts of financial statements
c. cash flow budget
d. revenue budget
D= Revenue budget

An income statement summarizes the ability of an organization to generate profits. Which of the following is not reflected on an income statements?
a. revenue
b. expenses
c. assets
d. net income

An income statement summarizes the ability of an organization to generate profits. Which of the following is not reflected on an income statements?
a. revenue
b. expenses
c. assets
d. net income
C. assets

Expenses that vary directly with the quantity of work performed are what type of costs

Expenses that vary directly with the quantity of work performed are what type of costs
Variable costs

The diversion of funds to persons in governance or management as a result of their position of trust is referred to as?

The diversion of funds to persons in governance or management as a result of their position of trust is referred to as?
INUREMENT

The following are all capital structure ratios except:
a. days in accounts receivables
b. long-term debt to net assets
c. debt service coverage
d. net asset financing

The following are all capital structure ratios except:
a. days in accounts receivables
b. long-term debt to net assets
c. debt service coverage
d. net asset financing
a. days in accounts receivables= CORRECT

Direct contracting goals include access to and control over premium dollars as well as reorganization to function as, or be a part of, and integrated delivery system. Strategies HCO might use to accomplish direct contracting goals include all of the follo

Which one of the following is not found under the ASSET section on a balance sheet?
a. net patient accounts recievable
b. fixed assets
c. inventories
d. net assets

Which one of the following is not found under the ASSET section on a balance sheet?
a. net patient accounts recievable
b. fixed assets
c. inventories
d. net assets
D= correct= net assets or equity found under Liabilities and equity section on balance shee

T/F
Total asset turnover is calculated by dividing the total operating revenue plus other income by total assets

TRUE:
Total asset turnover is calculated by dividing the total operating revenue plus other income by total assets

Primary concern of external auditor's is?
a. need of the audit committee
b. needs of internal management
c. need of external agencies & organizations
d. needs of accounting department

Primary concern of external auditor's is?
a. need of the audit committee
b. needs of internal management
c. need of external agencies & organizations
d. needs of accounting department
C= correct

All of the following items are current assets except for:
a. property & equipment
b. inventory
c. cash
d. accounts receivables

All of the following items are current assets except for:
a. property & equipment
b. inventory
c. cash
d. accounts receivables
a. property & equipment

Balance sheet is designed to balance
a. net income with long-term debt
b. conversion of common stock with equity
c. assets with current liabilities and stockholder equity
d. net income with long term debt and cash

Balance sheet is designed to balance
a. net income with long-term debt
b. conversion of common stock with equity
c. assets with current liabilities and stockholder equity
d. net income with long term debt and cash
C= correct= balance sheet matches current

T/F
Balance sheet is a snapshot of the financial position of an organization over a period of time

FALSE=Balance sheet is a snapshot of the financial position of an organization over a period of time
Balance sheet gives the financial position of organization at a given point in time

Which type of cost best fit the following statement? "The price of many supplies used directly in patient care, such as drugs and appliances, can be accounted directly to the responsibility center an the patient using them"
a. variable, semi-fixed, and fi

All of the following are acceptable methods of payment by 3rd party providers except:
a. charge minus discount
b. cost plus percentage growth
c. capitation
d. charge plus a percentage of growth
e. capitation.

All of the following are acceptable methods of payment by 3rd party providers except:
a. charge minus discount
b. cost plus percentage growth
c. capitation
d. charge plus a percentage of growth
e. capitation.
D= correct because it is not an acceptable met

All of the following are prerequisites for budgeting except:
a. sound organizational chart
b. well defined chart of accounts
c. basic management information system
d. Budget director & budget committee

All of the following are prerequisites for budgeting except:
a. sound organizational chart
b. well defined chart of accounts
c. basic management information system
d. Budget director & budget committee
C= correct

The area where most costs that a healthcare provider will incur on an annual basis comes from?

The area where most costs that a healthcare provider will incur on an annual basis comes from?
A. employee salaries

Balance sheet contains all of the following except:
a. assets
b. liabilities
c. expenses
d. net assets or equity

Balance sheet contains all of the following except:
a. assets
b. liabilities
c. expenses
d. net assets or equity
C. Expenses

The following are true regarding financial accounting except:
a. uses organizational and sub-unit data
b. Primarily historical
c. designed for external parties
d. Must adhere to external GAAP standards

The following are true regarding financial accounting except:
a. uses organizational and sub-unit data
b. Primarily historical
c. designed for external parties
d. Must adhere to external GAAP standards
A= correct............financial accounting uses only

The following are controllership function except:
a. budgeting
b. transaction accounting
c. financial accounting
d. financial planning

The following are controllership function except:
a. budgeting
b. transaction accounting
c. financial accounting
d. financial planning
D= See financial planning in Well-managed HCO book