Exam 12: Accounting for Hospitals and Other Health Care Providers

Which of the following is correct with respect to the recording of charity care for health care organizations?

Private-sector health care organizations use the three-category FASB format for the Statement of Cash flows,while public sector organizations use the four-category GASB format

When accounting for health care organizations,services provided for charity care are:

Dukes Medical Center performed charity care at a cost of $5,000 and a standard charge of $11,000. How much should Dukes recognize as revenue?

Because they are engaged in business-type activities,governmental health care organizations typically use the accrual basis and economic resources measurement focus.

A private not-for-profit entity estimated its Allowance for Contractual Adjustment. During the next year,the hospital found that the actual total of contractual adjustments applied to receivables on hand at the end of the previous year was $ 5,000 higher than the estimate. How should the difference be reported?

The AICPA Audit and Accounting Guide: Health Care Organizations provides reporting requirements for all of the following organizations except:

The equity section of the Statement of Net Position of a government-owned hospital may contain which of the following descriptions?

The difference between accounting for private not-for-profit hospitals and government- owned hospitals is:

The AICPA Audit and Accounting Guide: Health Care Organizations applies to:

Which of the following health care organizations must follow standards established by the Governmental Accounting Standards Board?

Identify the three types of temporary restrictions placed on contributions to a private sector not-for-profit health care organization and outline the accounting requirements for each type.

Health care organizations that are privately owned and operated to provide a return to investors follow FASB standards excluding those standards specifically for not-for-profits.

What are the components of the equity section of the Balance Sheet of Statements of Net Assets,as appropriate for the following types of organizations? •Not-for-profit,Business-Oriented Organizations •Investor-Owned Health Care Enterprises •Government Health Care Organizations

Contractual allowances for amounts billed to 3^rd parties are treated as:

For accounting purposes,health care organizations include HMOs and individual medical practitioners,as well as hospitals.

St.Martha's Hospital,a private not-for-profit,began the year 2015 with the following trial balance: Transactions for 2015 are as follows: (a)Collected $340,000 of the Patient Accounts Receivable that was outstanding at 12-31-2014. Actual contractual adjustments on these receivables totaled $152,000. (b)The Hospital billed patients $2,350,000 for services rendered. Of this amount,7% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $831,000.(Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments). (c)In 2014 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment. The equipment was purchased for $300,000 in 2015. (d)Charity care in the amount of $60,000 (at standard charges)was performed for indigent patients. (e)The Hospital received $700,000 in securities to establish a permanent endowment. Income from the endowment is unrestricted. (f)Other revenues collected in cash were: gift shop $11,000 and cafeteria $33,000. (g)The Hospital received in cash unrestricted interest income on endowments of $5,000. Unrealized gains on endowment investments totaled $7,000. (h)Expenses amounting to $1,120,000 for Professional Care of Patients,$310,000 for General Services,and $190,000 for Administration were paid in cash. (i)Depreciation on fixed assets,including the ultrasound equipment,totaled $124,000 for the year. ($90,000 for Professional Care of Patients,$18,000 for General Services,and $16,000 for Administration.) (j)Closing entries were prepared. Required: A.Record the transactions described above. B.Prepare in good form,a Statement of Operations for the year ended December 31,2015 C.Prepare in good form,a Statement of Changes in Net Assets for the year ended December 31,2015.

Patient Service Revenue of hospitals is to be presented net of contractual adjustments in the Statement of Operations.

Voluntary health and welfare organizations raise a significant amount or nearly all of their resources from contributions and grants,and are subject to the rules of the AICPA Not-for-Profit Guide.

A donor contributed $1,000,000 to a not-for-profit hospital with the restriction that the funds be invested indefinitely and the income be used for cancer research. Which of the following would be true?