Quiz 11 - Professor Frazier

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Quiz 11 - Professor Frazier Powered By Docstoc
					HSCI 425 - Healthcare Finance &
                                        ________________________________
Reimbursement
Spring 2010                                                 Student Name
Chapter 11

1. Which of the following items are part of a business's set of
financial statements?

      a.   Income statement
      b.   Balance sheet
      c.   Statement of cash flows
      d.   Both a. and b. above
      e.   a., b., and c. above

Answer: _____


2. True or False: The requirement to provide financial accounting
information is driven by the need for outside stakeholders (primarily
investors) to have reliable information about the financial status of an
organization.

      a. True
      b. False

Answer: _____


3. True or False: The set of rules and regulations that govern the
content and format of financial statements is called Government
Acceptable Procedures (GAP).

      a. True
      b. False

Answer: _____


4. Which of the following statements about cash versus accrual
accounting is most correct?

      a. In cash accounting, an event is recognized when a cash
      transaction occurs.
      b. In accrual accounting, an event is recognized when a cash
      transaction occurs.
      c. Most large healthcare organizations use cash accounting.
      d. Most small healthcare organizations use accrual accounting
      because it closely matches statements required for income tax
      purposes.
      e. In cash accounting, an event is recognized when the obligation
      for a cash transaction is created.

Answer: _____
5. Which of the following statements about the income statement is most
correct?

      a. It has several alternative names, including the statement of
      liabilities.
      b. It reports the financial status of an organization as of a
      single point in time.
      c. It reports the economic profitability of an organization.
      d. Its three major sections are operating costs, nonoperating
      costs, and total (net) costs.
      e. Income statements are always prepared annually, but never for
      shorter periods (for example, quarterly).

Answer: _____


6. Which of the following statements about gross and net patient service
revenue is most correct?

      a. Gross revenue reports revenue based on chargemaster prices.
      b. Net revenue is gross revenue less discounts and charity care.
      c. Net revenue is gross revenue less discounts, charity care, and
      bad debt losses.
      d. Both a. and b. above are correct.
      e. Both a. and c. above are correct.

Answer: _____


7. True or False: Under accrual accounting, all revenues reported on the
income statement represent cash collections.

      a. True
      b. False

Answer: _____


8. True or False: Under accrual accounting, all expenses reported on the
income statement represent cash costs.

      a. True
      b. False

Answer: _____


9. Which of the following statements about income statement expenses is
most correct?

      a. Supplies are expensed (shown) on the income statement when
      purchased.
      b. Supplies are expensed (shown) on the income statement when
      consumed (used to provide patient services).
      c. All lease expense is reported on the income statement.
      d. Both a. and c. above are correct.
      e. Both b. and c. above are correct.

Answer: _____


10. Which of the following statements concerning depreciation expense is
most correct?

      a. Depreciation expense accounts for the   loss of value of
      inventory.
      b. Depreciation expense accounts for the   loss of value of
      securities investments.
      c. Depreciation expense accounts for the   loss of value of fixed
      assets (plant and equipment).
      d. For accounting purposes, depreciation   expense is calculated by
      the double declining balance method.
      e. For accounting purposes, depreciation   expense is calculated by
      the triple declining balance method.

Answer: _____


11. Which of the following statements concerning net income is most
correct?

      a. Net income is the "bottom line" of the income statement.
      b. Net income measures total profitability as defined by
      accounting rules and regulations.
      c. In not-for-profit businesses, the entire amount of net income
      is reinvested in the business.
      d. Both a. and b. above are correct.
      e. a., b., and c. above are correct.

Answer: _____


12. Which of the following statements concerning net income versus cash
flow is most correct?

      a.   Net income is a rough measure of a business's cash flow.
      b.   Net income can be converted into a rough measure of cash flow
      by   adding noncash expenses, typically depreciation.
      c.   Net income can be converted into a rough measure of cash flow
      by   adding nonoperating income.
      d.   Net income can be converted into a rough measure of cash flow
      by   adding the provision for bad debts.
      e.   None of the above statements are correct.

Answer: _____

				
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