Question 1

What are third party payors? Why are their interests important in accounting for health care entities?

Accepted Answer

Third party payors are entities that gua

Question 2

A not-for-profit entity provides the following information for the year 2017:   Required: Prepare the journal entries for these transactions for the year 2017.

Accepted Answer

The answer of A not-for-profit entity provides the following information...

Question 3

Which of the following is not true about a merger of two not-for-profit entities?

Accepted Answer

A)  The two entities will continue to legally exist but there will be a new governing board. 
B)  Neither entity is considered to be acquired. 
C)  Identifiable assets and liabilities are not adjusted to their fair values at the date of the merger. 
D)  The two entities will together form an entirely new entity with a new governing board. 
E)  There will be no acquisition value or goodwill determination. 
A)  The two entities will continue to legally exist but there will be a new governing board. 
B)  Neither entity is considered to be acquired. 
C)  Identifiable assets and liabilities are not adjusted to their fair values at the date of the merger. 
D)  The two entities will together form an entirely new entity with a new governing board. 
E)  There will be no acquisition value or goodwill determination.

Question 4

On a Statement of Activities for a not-for-profit entity, what is the minimum required classification for categories of expenses?

Accepted Answer

A)  Fund-raising expenses and operating expenses. 
B)  Program services expenses and administrative services expenses. 
C)  Program services expenses and supporting services expenses. 
D)  Operating expenses and supporting services expenses. 
E)  Operating expenses and administrative expenses. 
A)  Fund-raising expenses and operating expenses. 
B)  Program services expenses and administrative services expenses. 
C)  Program services expenses and supporting services expenses. 
D)  Operating expenses and supporting services expenses. 
E)  Operating expenses and administrative expenses.

Question 5

During 2017, the Garfield Humane Society, a voluntary health and welfare entity, received cash donations of $892,000 and membership dues of $62,000.A member of the Humane Society donated services valued at $8,000 that would otherwise have been performed by a paid staff member.A pet food manufacturer donated dog food valued at $16,400.The Humane Society received a gift of $140,000, to be used in building a new animal shelter.Also during 2017, investments held by the Humane Society earned interest of $2,000.
Required:
Prepare a schedule showing the amount that the Garfield Humane Society should have recorded for contributions from public support for 2017.

Accepted Answer

The answer of During 2017, the Garfield Humane Society, a...

Question 6

Which entry would be the correct entry on the donor's books when the donor retains control of an asset, such as cash, which it contributes to a not-for-profit entity? DEBIT CREDIT

Accepted Answer

A)  Expense-charitable contribution Cash 
B)  Refundable advance to charity Cash 
C)  Charitable pledge Cash 
D)  Cash Liability to beneficiary 
E)  Cash Refundable advance 
A)  Expense-charitable contribution Cash 
B)  Refundable advance to charity Cash 
C)  Charitable pledge Cash 
D)  Cash Liability to beneficiary 
E)  Cash Refundable advance

Question 7

Reciprocal transfers where both parties give and receive something of value are

Accepted Answer

A)  Donated supplies and materials. 
B)  Unconditional promises to give. 
C)  Endowment transactions. 
D)  Exchange transactions. 
E)  Required contributions. 
A)  Donated supplies and materials. 
B)  Unconditional promises to give. 
C)  Endowment transactions. 
D)  Exchange transactions. 
E)  Required contributions.

Question 8

Which of the following topics are not included in the Form 990 which tax-exempt entities file to maintain their tax-exempt status?

Accepted Answer

A)  Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees and Independent Contractors. 
B)  Donor Disclosure: Identification of Every Donor by Name, Contribution Value & Contribution Type. 
C)  Statement of Revenue. 
D)  Balance Sheet. 
E)  Statement of Functional Expenses. 
A)  Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees and Independent Contractors. 
B)  Donor Disclosure: Identification of Every Donor by Name, Contribution Value & Contribution Type. 
C)  Statement of Revenue. 
D)  Balance Sheet. 
E)  Statement of Functional Expenses.

Question 9

When an acquisition occurs in not-for-profit accounting, recognition of goodwill depends on:

Accepted Answer

A)  Whether control has been achieved by the acquiring not-for-profit entity. 
B)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenue from providing goods or services or from membership fees, or whether it is expected to generate primarily contribution and investment revenue in the future. 
C)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenues from goods or services or membership fees, as well as significant amounts of contribution revenues in the future. 
D)  Whether the acquired not-for-profit entity has a history of generating significant revenues of any type. 
E)  None of these answer choices are correct. Goodwill can only be recognized in an acquisition of a for-profit entity. 
A)  Whether control has been achieved by the acquiring not-for-profit entity. 
B)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenue from providing goods or services or from membership fees, or whether it is expected to generate primarily contribution and investment revenue in the future. 
C)  Whether the acquired not-for-profit entity has the ability to generate significant amounts of revenues from goods or services or membership fees, as well as significant amounts of contribution revenues in the future. 
D)  Whether the acquired not-for-profit entity has a history of generating significant revenues of any type. 
E)  None of these answer choices are correct. Goodwill can only be recognized in an acquisition of a for-profit entity.

Question 10

In this month, there were several patients that had no health insurance and due to their low income level, the hospital decided that $85,000 of receivables would not be collectible.
Required:
Prepare the necessary journal entry to reflect the decision to consider the $85,000 as charity care.

Accepted Answer

The answer of In this month, there were several patients...

Question 11

Turnaround Childcare Agency is a private not-for-profit entity providing child care for a fee.The agency has a permanent endowment and the income may be used to sponsor families that are unable to pay for services but the principal must be preserved.In addition, various fundraising activities take place during the year.
When the agency held its annual holiday fundraiser in 2017, pledges of $50,000 were received.The administration expected 5% of the pledges to be uncollectible.
In addition, income of $10,000 was received from the permanent endowment to sponsor children to be placed with foster families.
Prepare the journal entries for these transactions.

Accepted Answer

The answer of Turnaround Childcare Agency is a private not-for-profit...

Question 12

What is the basis of accounting used in reporting the Statement of Activities?

Accepted Answer

A)  Cash basis. 
B)  Modified accrual basis. 
C)  Accrual basis. 
D)  Either cash basis or accrual basis, depending on the type of revenue. 
E)  Either modified accrual basis or accrual basis, depending on the type of revenue. 
A)  Cash basis. 
B)  Modified accrual basis. 
C)  Accrual basis. 
D)  Either cash basis or accrual basis, depending on the type of revenue. 
E)  Either modified accrual basis or accrual basis, depending on the type of revenue.

Question 13

What is the appropriate account to debit when reducing net patient service revenue as a result of arrangements with third party payors?

Accepted Answer

A)  Contractual Adjustments. 
B)  Allowance for uncollectible and reduced accounts. 
C)  Patient Service Revenues. 
D)  Account Receivable-Patients. 
E)  Accounts Receivable-Third Party. 
A)  Contractual Adjustments. 
B)  Allowance for uncollectible and reduced accounts. 
C)  Patient Service Revenues. 
D)  Account Receivable-Patients. 
E)  Accounts Receivable-Third Party.

Question 14

How are investments in equity securities with readily determinable market values, and their related unrealized gains and losses, reported by a not-for-profit entity?

Accepted Answer

A)  At lower of cost or market in the Statement of Financial Position, with unrealized losses in the Statement of Activities. 
B)  At fair value in the Statement of Financial Position, with unrealized gains and losses in the Statement of Activities. 
C)  At lower of cost or market in the Statement of Financial Position, with unrealized losses in Temporarily Restricted Net Assets. 
D)  At original cost in the Statement of Financial Position, with unrealized gains and losses in the Statement of Activities. 
E)  At original cost in the Statement of Financial Position, with unrealized gains and losses disclosed in the notes to the financial statements. 
A)  At lower of cost or market in the Statement of Financial Position, with unrealized losses in the Statement of Activities. 
B)  At fair value in the Statement of Financial Position, with unrealized gains and losses in the Statement of Activities. 
C)  At lower of cost or market in the Statement of Financial Position, with unrealized losses in Temporarily Restricted Net Assets. 
D)  At original cost in the Statement of Financial Position, with unrealized gains and losses in the Statement of Activities. 
E)  At original cost in the Statement of Financial Position, with unrealized gains and losses disclosed in the notes to the financial statements.

Question 15

Dura Foundation, a voluntary health and welfare entity dedicated to finding medical cures and supported by contributions from the general public, included the following costs in its Statement of Functional Expenses for the year ended December 31, 2018:
  
-What should Dura Foundation report as supporting service expenses?

Accepted Answer

The answer of Dura Foundation, a voluntary health and welfare...

Question 16

What two classifications are used for the expenses incurred by voluntary health and welfare entities?

Accepted Answer

The two classifications of exp

Question 17

Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare entity?

Accepted Answer

A)  Statement of Financial Position. 
B)  Statement of Functional Expenses. 
C)  Statement of Activities and Changes in Net Assets. 
D)  Statement of Cash Flows. 
E)  Statement of Operations. 
A)  Statement of Financial Position. 
B)  Statement of Functional Expenses. 
C)  Statement of Activities and Changes in Net Assets. 
D)  Statement of Cash Flows. 
E)  Statement of Operations.

Question 18

Not-for-profit entities that are eligible to obtain tax-exempt status under Internal Revenue Code section 501(c)(4) are

Accepted Answer

A)  Those promoting literacy. 
B)  Those promoting scientific research. 
C)  Chambers of Commerce. 
D)  Professional sports leagues. 
E)  Those functioning exclusively to promote social welfare. 
A)  Those promoting literacy. 
B)  Those promoting scientific research. 
C)  Chambers of Commerce. 
D)  Professional sports leagues. 
E)  Those functioning exclusively to promote social welfare.

Question 19

Which of the following types of health care entitys recognize depreciation expense?

Accepted Answer

The answer of Which of the following types of health...

Question 20

The following gifts are received in 2016 by a not-for-profit entity:
I.$2,000 specified by the donor to be used to pay salaries.
II.$10,000 specified by the donor for new conference room furniture.
III.$5,000 specified by the donor to be held for one year before being expended.
The salaries are paid in 2017 and the conference room furniture is purchased in 2016. The donor did not specify any time restriction on holding the conference room furniture.
-With respect to the donations received in 2016, what total amount should be recorded as an increase to Temporarily Restricted Net Assets?

Accepted Answer

A)  $ 2,000 
B)  $ 7,000 
C)  $12,000 
D)  $15,000 
E)  $17,000 
A)  $ 2,000 
B)  $ 7,000 
C)  $12,000 
D)  $15,000 
E)  $17,000

Exam 18: Accounting for Not-For-Profit Entities

What are third party payors? Why are their interests important in accounting for health care entities?

A not-for-profit entity provides the following information for the year 2017: Required: Prepare the journal entries for these transactions for the year 2017.

Which of the following is not true about a merger of two not-for-profit entities?

On a Statement of Activities for a not-for-profit entity, what is the minimum required classification for categories of expenses?

Which entry would be the correct entry on the donor's books when the donor retains control of an asset, such as cash, which it contributes to a not-for-profit entity? DEBIT CREDIT

Reciprocal transfers where both parties give and receive something of value are

Which of the following topics are not included in the Form 990 which tax-exempt entities file to maintain their tax-exempt status?

When an acquisition occurs in not-for-profit accounting, recognition of goodwill depends on:

In this month, there were several patients that had no health insurance and due to their low income level, the hospital decided that $85,000 of receivables would not be collectible. Required: Prepare the necessary journal entry to reflect the decision to consider the $85,000 as charity care.

What is the basis of accounting used in reporting the Statement of Activities?

What is the appropriate account to debit when reducing net patient service revenue as a result of arrangements with third party payors?

How are investments in equity securities with readily determinable market values, and their related unrealized gains and losses, reported by a not-for-profit entity?

What two classifications are used for the expenses incurred by voluntary health and welfare entities?

Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare entity?

Not-for-profit entities that are eligible to obtain tax-exempt status under Internal Revenue Code section 501(c)(4) are

Which of the following types of health care entitys recognize depreciation expense?

The Equity Method of Accounting for Investments

A: the Equity Method of Accounting for Investments

Consolidation of Financial Information

A: Consolidation of Financial Information

Consolidations - Subsequent to the Date of Acquisition

A: Consolidations - Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

A: Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements Intra-Entity Asset Transactions

A: Consolidated Financial Statements Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

A: Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flows, and Other Issues

Consolidated Financial Statements - Ownership Patterns and Income Taxes

A: Consolidated Financial Statements - Ownership Patterns and Income Taxes

Segment and Interim Reporting

A: Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

A: Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

A: Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Accounting Standards

A: Worldwide Accounting Diversity and International Accounting Standards

Financial Reporting and the Securities and Exchange Commission

A: Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

A: Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operation

A: Partnerships: Formation and Operation

Partnerships: Termination and Liquidation

A: Partnerships: Termination and Liquidation

Accounting for State and Local Governments, Part I

A: Accounting for State and Local Governments, Part I

Accounting for State and Local Governments, Part II

A: Accounting for State and Local Governments, Part II

A: Accounting for Not-For-Profit Entities

Accounting for Estates and Trusts

A: Accounting for Estates and Trusts

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