Exam 16: Accounting for Health Care Organizations

According to FASB standards,which of the following entities would not be considered a health care organization?

What auditing issues are of particular significance to the health care industry?

Under the FASB GAAP hierarchy the AICPA Audit and Accounting Guide Health Care Entities would be category (b)authoritative guidance.

Continuing care retirement communities (CCRC)provide residential care in a facility,along with some level of long-term medical care that is less intensive that hospital care.

Contractual Adjustments is properly characterized as:

Health care is provided by organizations that may be for-profit,not-for-profit,or governmental; although over half of all nonfederal health care is provided by not-for-profit entities.

In accordance with the FASB Codification estimated uncollectible account amounts are reported in the same manner for patient accounts receivable and donor pledges receivable.

In accordance with the FASB Codification,which of the following would be an appropriate performance indicator for a not-for-profit health care organization?

Which of the following is shown on a statement of changes in net assets?

Which of the following is (are)considered an authoritative source of GAAP for nongovernmental not-for-profit health care entities?

The goal of financial and operational analysis of a health care entity is to determine if the entity is profitable.

Where would a capitation fee be reported on a health care entity's financial statements?

The following are key terms in Chapter 16 that relate to accounting for health care organizations: A.Contractual adjustments B.Capitation fees C.Charity care D.Diagnosis-related groups E.Prospective payment system F.Health maintenance organizations G.Performance indicator H.Third-party payor For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.

Which of the following statements is about diagnosis-related groups (DRGs)?

The "equity" section (assets minus liabilities)of a health care entity's balance sheet or statement of net position will indicate whether the health care organization is for-profit,not-for-profit,or governmental.

Assets set aside by the governing board for the eventual construction of a hospital addition should be recorded as "assets limited as to use."

Which of the following would be considered service revenue of a health care entity?

The purpose of a performance indicator is to provide an operating measure for not-for-profit health care organizations that is equivalent to income from continuing operations of for-profit health care organizations.

Under GAAP,both governmental and nongovernmental not-for-profit health care entities are required to identify operating and nonoperating activity on their operating statements.

Georgetown Hospital,a governmental hospital,recorded during its fiscal year ended September 30,gross patient services valued at $15,000,000,excluding charity care services of $1,600,000.However,contractual adjustments by third-party payors amounted to $1,200,000.In May of that year it received donated medical supplies worth $2,000; supplies it had planned to purchase had it not been for the gift.At year-end,the governing board set aside investments in the amount of $500,000 for future plant expansion and $250,000 to be invested with the related earnings used for a special prenatal care program. 1.In its operating statement for the year ended September 30,how much Georgetown should report as net patient services revenue? Justify your answer. 2.For the year ended September 30,how should the donation of medical supplies be reported?3.What amount of unrestricted net position should Georgetown report in its balance sheet as board designated,assuming it had no board designated net position at the beginning of the year?