Exam 16: Accounting for Health Care Organizations

Where does a nongovernmental not-for-profit health care entity report increases that have occurred in its temporarily restricted net assets?

In accordance with the FASB Codification,net assets released from restriction should be included as part of the performance indicator on a health care entity's statement of operations.

FASB standards require that not-for-profit health care entities prepare a statement of changes in net assets.

A hospital originally recorded all patient services it provided as a $500,000 debit to accounts receivable.Upon review the hospital determined that a contractual adjustment of $200,000 needs to be made,and estimated bad debts of $5,000 need to be recorded.In addition,at the time the receivable was recorded the hospital did not realize $100,000 should be considered charity services.Based on the information provided,what is the net amount of accounts receivable that the hospital would report on its financial statements?

"The goal of financial and operational analysis for the manager is to determine the creditworthiness of the health care organization." Do you agree with the statement? Why or why not?

Congress mandated diagnosis-related groups (DRG)as a method for recording costs in health care organizations,in part to facilitate Medicare's prospective payment system.Explain what the DRG system is and describe the impact this change may have had on the cost accounting systems of health care organizations.

Which of the following would usually be considered as temporarily restricted net assets in a nongovernmental not-for-profit hospital?

Financial reporting standards for all hospitals are established by the FASB.

All health care organizations report investments at fair value and report unrealized gains or losses on the statement of operations.

Record in general journal form the following selected transactions for Avalon General Hospital,a nongovernmental not-for-profit institution. 1. Gross charges for patient services rendered during the period amounted to $7,870,000,of which $350,000 represented charity care for indigent patients. 2. During the year the provision for bad debts was set at $190,000 and contractual adjustments amounted to $435,000. 3. A wealthy donor donated $2,000,000 to construct a new cardiology wing on the hospital.4. During the year,the new cardiology wing (see item 3)was one-half completed at a cost of $1,000,000.

Which of the following statements concerning the Patient Protection and Affordability Act (also known as the Affordable Care Act)is ?

In accordance with the FASB Codification,an expense for diabetes research that was financed by temporarily restricted contributions would be recorded as a decrease of unrestricted net assets by a not-for-profit health care organization.

A nongovernmental not-for-profit health care entity would report the net asset categories unrestricted,restricted,and permanently restricted.

Show entries in general journal form for the following transactions of Bothwell Regional Hospital,a nongovernmental not-for-profit hospital.1.For the month just ended the hospital received in cash $8,000 from the hospital's gift shop sales,and received donated medicines with a fair value of $47,000.These medicines are of the type the hospital normally would purchase.2.The hospital's finance officer,in compliance with the directive of the governing board,invested $600,000 of operating cash in certificates of deposit to be held for future purchases of equipment.3.New equipment costing $750,000 was purchased from money given the hospital in a prior year to be held until needed for equipment purchases.4.A federal grant was received in cash in the amount of $400,000 to be used for heart research.During the current year only $50,000 was spent for this research program.

Which of the following volunteer services is most likely to be reported by a nongovernmental not-for-profit hospital as contribution revenue and an expense?

Which of the following would be considered an asset limited as to use?

In accordance with the FASB Codification,donated medicines that normally would be purchased by a hospital should be recorded at fair value and credited to which of the following?

Explain how one can evaluate both the financial performance of a hospital and the quality of health care the hospital provides.

Patient service revenues and related receivables exclude charges for charity care services.

Contractual adjustments that arise from differences between the gross charge for patient services and the amount paid by a third party payor are reported as: