Question 1

When a hospital uses funds for internal record-keeping purposes,Plant Replacement and Expansion Funds are used to report:

Accepted Answer

A) resources contributed by outsiders that can only be used to replace or expand the hospital's existing physical plant 
B) resources contributed by outsiders and those designated by the hospital's governing board that can only be used to replace or expand the hospital's existing physical plant 
C) capital asset expenditures 
D) resources restricted by any legal agreement,such as a bond agreement or a trust arrangement 
A) resources contributed by outsiders that can only be used to replace or expand the hospital's existing physical plant 
B) resources contributed by outsiders and those designated by the hospital's governing board that can only be used to replace or expand the hospital's existing physical plant 
C) capital asset expenditures 
D) resources restricted by any legal agreement,such as a bond agreement or a trust arrangement A

Question 2

The Monks Veterinary Hospital receives $1.5 million from the Clementine Foundation.Only the earnings from investing the contribution may be used by the Hospital to conduct research on feline leukemia.Assuming the Hospital uses fund accounting for internal purposes,which funds should be used to report (1)the assets and (2)any investment earnings? $\begin{array}{lll}&\text { original } & \text { investment } \
&\text { contribution } & \text { earnings }\
\hline a.& \text { endowment fund } & \text { endowment fund } \
b.&\text { general fund } & \text { specific purpose fund } \
c.&\text { specific purpose fund } & \text { general fund } \
d.&\text { endowment fund } & \text { specific purpose fund }
\end{array}$

Accepted Answer

D

Question 3

(Accounting for donations and donor-restricted and board-designated resources)
A not-for-profit hospital uses the following funds to account internally for its resources: General Fund (GF);Specific Purpose Funds (SPF);Plant Replacement and Expansion Funds (PREF);and Endowment Funds (EF).The hospital is establishing a special trauma unit for brain-related injuries,and is soliciting contributions for this purpose.It reports donations as revenues,rather than gains,because fund-raising is a significant part of its ongoing activities.Record the following transactions,stating the fund or funds used,and whether unrestricted,temporarily restricted,or permanently restricted net assets are affected.
a.Hospital trustees set aside $100,000 for the purpose of training its nurses to deal with patients in the hospital's trauma unit.
b.National Products donated trauma equipment having a fair value of $325,000.Also,Stay-Cool Chemical donated drugs having a fair value of $44,000.
c.The hospital received cash contributions from local donors,who stipulated that the donations must be used for the following purposes involving the trauma unit:
(1)$10,000,to help pay the salary of Dr.Harlan Elliot,noted brain surgeon;and
(2)$200,000,to be used solely for the purpose of equipping the trauma unit.
d.Dr.Cheryl Fusco was hired.His first month's salary was $25,000.The hospital used the donation received in transaction c(1)to pay part of Dr.Fusco's salary.
e.The hospital purchased $80,000 of special equipment for the trauma unit.Its policy is to use donated funds to acquire equipment before it uses internally-generated funds.

Accepted Answer

e. $\begin{array}{lr}
\text { PREF }\\text { Temporarily restricted asset reclass. out-- }\\text { net assets released from restriction }\\text { used for purchase of equipment }&80,000\\text { Cash }&&80,000\\\text { GF }\\text { Equipment }&80,000\\text { Unrestricted asset reclass. in--net }\\text { assets released from restriction }\\text { for purchase of equipment }&&80,000
\end{array}$

Question 4

A not-for-profit hospital had gross patient billings of $43 million,contractual adjustments of $8 million,and charity care of $1,500,000.The hospital also made a provision for bad debts in the amount of $1,000,000.How much should the hospital report as net patient service revenue?

Accepted Answer

A) $43 million 
B) $35 million 
C) $33.5 million 
D) $32.5 million 
A) $43 million 
B) $35 million 
C) $33.5 million 
D) $32.5 million

Question 5

After it prepares its financial statements,a hospital has historically received malpractice claims for events occurring before the balance sheet date.How should the hospital handle these incurred but not reported (IBNR)claims its financial statements?

Accepted Answer

A) take no action until it actually receives claims. 
B) disclose,in the notes to its financial statements,that it historically receives IBNR claims;state that no estimate can be made of probable loss because no claims have been filed 
C) estimate,based on past experience,the amount of probable loss on IBNR claims;report this amount in the notes 
D) estimate,based on past experience,the amount of probable loss on IBNR claims;report this amount as an expense and a liability 
A) take no action until it actually receives claims. 
B) disclose,in the notes to its financial statements,that it historically receives IBNR claims;state that no estimate can be made of probable loss because no claims have been filed 
C) estimate,based on past experience,the amount of probable loss on IBNR claims;report this amount in the notes 
D) estimate,based on past experience,the amount of probable loss on IBNR claims;report this amount as an expense and a liability

Question 6

How are hospitals paid when they enter into a capitation agreement?

Accepted Answer

A) based on predetermined rates for individual procedures performed by the hospital 
B) based on interim rates for individual procedures performed by the hospital,subject to retrospective adjustment after submission of actual costs 
C) based on agreed-upon premiums per member per month,for agreeing to provide care 
D) based on the total costs incurred by the hospital for actual care rendered to members of a particular group 
A) based on predetermined rates for individual procedures performed by the hospital 
B) based on interim rates for individual procedures performed by the hospital,subject to retrospective adjustment after submission of actual costs 
C) based on agreed-upon premiums per member per month,for agreeing to provide care 
D) based on the total costs incurred by the hospital for actual care rendered to members of a particular group

Question 7

A hospital invested $780,000 in equity securities in March,2012.When it prepared its financial statements at year-end,the securities had a fair value of $802,000.How should the hospital report the securities in its balance sheet at year end?

Accepted Answer

A) report the securities at cost ($780,000). 
B) report the securities at cost ($780,000)and show the fair value ($802,000)parenthetically next to the caption "Investments." 
C) report the securities at cost ($780,000)and show the fair value ($802,000)in the notes to he financial statements. 
D) report the securities at the fair value ($802,000) 
A) report the securities at cost ($780,000). 
B) report the securities at cost ($780,000)and show the fair value ($802,000)parenthetically next to the caption "Investments." 
C) report the securities at cost ($780,000)and show the fair value ($802,000)in the notes to he financial statements. 
D) report the securities at the fair value ($802,000)

Question 8

When a not-for-profit hospital uses funds for internal record-keeping purposes,what types of resources are accounted for in the General Funds?

Accepted Answer

A) all resources used in normal daily operations except for plant resources 
B) all resources except for those in funds that are classified as restricted 
C) all resources except for assets whose use is limited 
D) all resources except for those in funds that are classified as restricted and assets whose use is limited 
A) all resources used in normal daily operations except for plant resources 
B) all resources except for those in funds that are classified as restricted 
C) all resources except for assets whose use is limited 
D) all resources except for those in funds that are classified as restricted and assets whose use is limited

Question 9

A hospital had gross patient billings of $50 million,contractual adjustments of $20 million,and charity care of $5 million.How much is the hospital's net patient service revenue?

Accepted Answer

A) $50 million 
B) $25 million 
C) $30 million 
D) $45 million 
A) $50 million 
B) $25 million 
C) $30 million 
D) $45 million

Question 10

A hospital had capitation agreements with several health maintenance organizations to provide services.The hospital received $12 million of capitation fees for the year.The hospital also calculated that: (a)its costs to provide these services were $11.8 million;and (b)the value of these services at established billing rates were $16 million.How should the hospital report this information on the face of its financial statements?

Accepted Answer

A) report $200,000 as a separate item of revenue,labeled net premium revenue. 
B) add $16 million to Net patient service revenue,and deduct $4 million in a separate item labeled Adjustment for capitation premiums. 
C) report Premium revenue of $12 million as a separate item of revenue,and report cost of serving HMO patients of $11.8 million as a separate item of expense. 
D) report premium revenue of $12 million as a separate item of revenue,if significant. 
A) report $200,000 as a separate item of revenue,labeled net premium revenue. 
B) add $16 million to Net patient service revenue,and deduct $4 million in a separate item labeled Adjustment for capitation premiums. 
C) report Premium revenue of $12 million as a separate item of revenue,and report cost of serving HMO patients of $11.8 million as a separate item of expense. 
D) report premium revenue of $12 million as a separate item of revenue,if significant.

Question 11

What if Ruth Clark Hospital (Question 34)is a governmental hospital.How would the Ruth Clark Hospital report its interest in the Hospital Foundation and the contributions it received at the end of the first year?

Accepted Answer

A) there is no difference in reporting fund-raising foundations between not-for-profit and governmental hospitals 
B) as cash of $900,000,unrestricted net position of $150,000,and restricted net position of $600,000 
C) it should present the Foundation as a discretely presented component unit (in a separate column)if the GASB standards for reporting it are met 
D) as interest in hospital foundation of $900,000 and contributions of $900,000,with net position separately displaying unrestricted from restricted contributions 
A) there is no difference in reporting fund-raising foundations between not-for-profit and governmental hospitals 
B) as cash of $900,000,unrestricted net position of $150,000,and restricted net position of $600,000 
C) it should present the Foundation as a discretely presented component unit (in a separate column)if the GASB standards for reporting it are met 
D) as interest in hospital foundation of $900,000 and contributions of $900,000,with net position separately displaying unrestricted from restricted contributions

Question 12

Which of the following statements about the form and content of a governmental hospital's statement of revenues,expenses,and changes in net position is false?

Accepted Answer

A) nonoperating revenues and expenses are shown separately from operating revenues and expenses 
B) capital contributions and endowment contributions are shown separately from operating revenues 
C) the statement covers both unrestricted and restricted funds 
D) the provision for bad debts is reported as an operating expense 
A) nonoperating revenues and expenses are shown separately from operating revenues and expenses 
B) capital contributions and endowment contributions are shown separately from operating revenues 
C) the statement covers both unrestricted and restricted funds 
D) the provision for bad debts is reported as an operating expense

Question 13

A not-for-profit hospital will prepare a statement of operations pertaining to the hospital's $\begin{array}{rrr}&\text { unrestricted } & \text { restricted } \
&\text { net assets } & \text { net assets } \
\hline
\text { a. } & \text { yes } & \text { yes } \
\text { b. } & \text { no } & \text { no } \
\text { c. } & \text { no } & \text { yes } \
\text { d. } & \text { yes } & \text { no }
\end{array}$

Accepted Answer

The answer of A not-for-profit hospital will prepare a statement...

Question 14

When a hospital uses funds for internal record-keeping purposes,Specific Purpose Funds are those that are:

Accepted Answer

A) limited as to use by hospital trustees to specific purposes 
B) restricted by donors or grantors to specific operating purposes 
C) restricted by donors or grantors to specific operating or capital purposes 
D) restricted by any legal agreement,such as a bond agreement or a trust arrangement 
A) limited as to use by hospital trustees to specific purposes 
B) restricted by donors or grantors to specific operating purposes 
C) restricted by donors or grantors to specific operating or capital purposes 
D) restricted by any legal agreement,such as a bond agreement or a trust arrangement

Question 15

In a governmental hospital's operating statement,which of the following is true?

Accepted Answer

A) The last category reports other comprehensive income 
B) Restricted revenues are distinguished from unrestricted revenues 
C) Operating expenses are deducted from operating revenues to show operating income 
D) Bad debt expense is reported to the extent that patients are not expected to pay their bills. 
A) The last category reports other comprehensive income 
B) Restricted revenues are distinguished from unrestricted revenues 
C) Operating expenses are deducted from operating revenues to show operating income 
D) Bad debt expense is reported to the extent that patients are not expected to pay their bills.

Question 16

A group of retired registered nurses decide to volunteer their services to a not-for-profit hospital.They perform a variety of tasks,including: (a)filling in for regular nurses when they are out sick; (b)helping out in food preparation;and (c)selling in the hospital gift shop.For which of the three tasks must donated revenues and expenses be recognized?

Accepted Answer

A) only task (a) 
B) only tasks (a)and (b) 
C) all three tasks 
D) none of the three tasks 
A) only task (a) 
B) only tasks (a)and (b) 
C) all three tasks 
D) none of the three tasks

Question 17

A hospital entered into a retrospective billing arrangement with a third-party payer,calling for interim billing rates,subject to final settlement after the year's end.Final settlement was to be based on the hospital's submission of costs and audit by the third-party payer.During the year,the hospital provided services to patients covered by this third party,billing for $4.8 million at the hospital's established rates.However,the hospital's services at the interim billing rates were 25 percent less than the established rates.Before issuing its financial statements for the year,the hospital analyzed its costs and estimated that the rates charged to the third-party payer were $300,000 too high.For this third party,how much was the total contractual adjustment for the year?

Accepted Answer

A) $300,000 
B) $1,200,000 
C) $1,500,000 
D) $1,700,000 
A) $300,000 
B) $1,200,000 
C) $1,500,000 
D) $1,700,000

Question 18

(Distinguishing among the three net asset classifications)
Assume that Andy Kelly Hospital (Problem 44)is a not-for-profit hospital.For each of the six transactions or events shown in that problem,state which of the three net asset classifications are affected: unrestricted;temporarily restricted;or permanently restricted.

Accepted Answer

a.temporarily restricted
b.unr

Question 19

A governmental hospital receives notice of a $100,000 grant from the federal government to conduct breast cancer research.The grant contains an eligibility requirement;that is,the hospital must incur costs and submit quarterly reports of allowable costs incurred.The reports are subject to audit.When should the hospital recognize revenues under the grant?

Accepted Answer

A) upon receiving notice of the grant 
B) each quarter,when it submits quarterly reports 
C) as it incurs allowable costs 
D) after the all cost reports have been audited 
A) upon receiving notice of the grant 
B) each quarter,when it submits quarterly reports 
C) as it incurs allowable costs 
D) after the all cost reports have been audited

Question 20

A not-for-profit hospital's trustees designate $600,000 of the hospital's unrestricted resources for the future acquisition of equipment.The trustees tell the hospital comptroller to purchase a separate certificate of deposit for it.How should the hospital record and report this investment?

Accepted Answer

A) as an investment,the resources of which will be designated as restricted in the net assets section of the balance sheet 
B) report the investment as "assets limited as to use," and report $600,000 of net assets as restricted net assets 
C) report the investment as "assets limited as to use," and report $600,000 of net assets as unrestricted net assets 
D) report the investment as "restricted" investments and report $600,000 of net assets as restricted net assets 
A) as an investment,the resources of which will be designated as restricted in the net assets section of the balance sheet 
B) report the investment as "assets limited as to use," and report $600,000 of net assets as restricted net assets 
C) report the investment as "assets limited as to use," and report $600,000 of net assets as unrestricted net assets 
D) report the investment as "restricted" investments and report $600,000 of net assets as restricted net assets

When a hospital uses funds for internal record-keeping purposes,Plant Replacement and Expansion Funds are used to report:

A not-for-profit hospital had gross patient billings of $43 million,contractual adjustments of $8 million,and charity care of $1,500,000.The hospital also made a provision for bad debts in the amount of $1,000,000.How much should the hospital report as net patient service revenue?

After it prepares its financial statements,a hospital has historically received malpractice claims for events occurring before the balance sheet date.How should the hospital handle these incurred but not reported (IBNR)claims its financial statements?

How are hospitals paid when they enter into a capitation agreement?

A hospital invested $780,000 in equity securities in March,2012.When it prepared its financial statements at year-end,the securities had a fair value of $802,000.How should the hospital report the securities in its balance sheet at year end?

When a not-for-profit hospital uses funds for internal record-keeping purposes,what types of resources are accounted for in the General Funds?

A hospital had gross patient billings of $50 million,contractual adjustments of $20 million,and charity care of $5 million.How much is the hospital's net patient service revenue?

What if Ruth Clark Hospital (Question 34)is a governmental hospital.How would the Ruth Clark Hospital report its interest in the Hospital Foundation and the contributions it received at the end of the first year?

Which of the following statements about the form and content of a governmental hospital's statement of revenues,expenses,and changes in net position is false?

A not-for-profit hospital will prepare a statement of operations pertaining to the hospital's unrestricted restricted net assets net assets a. yes yes b. no no c. no yes d. yes no

When a hospital uses funds for internal record-keeping purposes,Specific Purpose Funds are those that are:

In a governmental hospital's operating statement,which of the following is true?

A not-for-profit hospital's trustees designate $600,000 of the hospital's unrestricted resources for the future acquisition of equipment.The trustees tell the hospital comptroller to purchase a separate certificate of deposit for it.How should the hospital record and report this investment?

Governmental and Not-For-Profit

The Use of Funds in Governmental Accounting

Budgetary Considerations in Governmental Accounting

The Governmental Fund Accounting Cycle

The Governmental Fund Accounting Cycle

The Governmental Fund Accounting Cycle

The Governmental Accounting Cycle

The Governmental Fund Accounting Cycle--Fiduciary Funds

Reporting Principles and Preparation of Fund Financial Statements

Government-Wide Financial Statements

Federal Government Accounting and Reporting

Accounting for Not-For-Profit Organizations

Analysis of Financial Statements and Financial Condition

Fundamentals of Accounting

Filters

Exam 13: Accounting for Health Care Organizations

When a hospital uses funds for internal record-keeping purposes,Plant Replacement and Expansion Funds are used to report:

A not-for-profit hospital had gross patient billings of $43 million,contractual adjustments of $8 million,and charity care of $1,500,000.The hospital also made a provision for bad debts in the amount of $1,000,000.How much should the hospital report as net patient service revenue?

After it prepares its financial statements,a hospital has historically received malpractice claims for events occurring before the balance sheet date.How should the hospital handle these incurred but not reported (IBNR)claims its financial statements?

How are hospitals paid when they enter into a capitation agreement?

A hospital invested $780,000 in equity securities in March,2012.When it prepared its financial statements at year-end,the securities had a fair value of $802,000.How should the hospital report the securities in its balance sheet at year end?

When a not-for-profit hospital uses funds for internal record-keeping purposes,what types of resources are accounted for in the General Funds?

A hospital had gross patient billings of $50 million,contractual adjustments of $20 million,and charity care of $5 million.How much is the hospital's net patient service revenue?

What if Ruth Clark Hospital (Question 34)is a governmental hospital.How would the Ruth Clark Hospital report its interest in the Hospital Foundation and the contributions it received at the end of the first year?

Which of the following statements about the form and content of a governmental hospital's statement of revenues,expenses,and changes in net position is false?

A not-for-profit hospital will prepare a statement of operations pertaining to the hospital's unrestricted restricted net assets net assets a. yes yes b. no no c. no yes d. yes no

When a hospital uses funds for internal record-keeping purposes,Specific Purpose Funds are those that are:

In a governmental hospital's operating statement,which of the following is true?

A not-for-profit hospital's trustees designate $600,000 of the hospital's unrestricted resources for the future acquisition of equipment.The trustees tell the hospital comptroller to purchase a separate certificate of deposit for it.How should the hospital record and report this investment?

Governmental and Not-For-Profit

The Use of Funds in Governmental Accounting

Budgetary Considerations in Governmental Accounting

The Governmental Fund Accounting Cycle

The Governmental Fund Accounting Cycle

The Governmental Fund Accounting Cycle

The Governmental Accounting Cycle

The Governmental Fund Accounting Cycle--Fiduciary Funds

Reporting Principles and Preparation of Fund Financial Statements

Government-Wide Financial Statements

Federal Government Accounting and Reporting

Accounting for Not-For-Profit Organizations

Analysis of Financial Statements and Financial Condition

Fundamentals of Accounting

Filters