Question 1

Which of the following is a major difference between a not-for-profit hospital's statement of operations and statement of changes in net assets?

Accepted Answer

A) contributions are not reported in the statement of operations,but are reported in the statement of changes in net assets. 
B) net assets released from restrictions are not reported in the statement of operations,but are reported in the statement of changes in net assets. 
C) the statement of operations does not cover changes in both unrestricted and restricted net assets,but the statement of changes in net assets does cover changes in both unrestricted and restricted net assets. 
D) the statement of operations is not prepared on the cash basis of accounting,but the statement of changes in net assets is prepared on the cash basis of accounting. 
A) contributions are not reported in the statement of operations,but are reported in the statement of changes in net assets. 
B) net assets released from restrictions are not reported in the statement of operations,but are reported in the statement of changes in net assets. 
C) the statement of operations does not cover changes in both unrestricted and restricted net assets,but the statement of changes in net assets does cover changes in both unrestricted and restricted net assets. 
D) the statement of operations is not prepared on the cash basis of accounting,but the statement of changes in net assets is prepared on the cash basis of accounting.

Question 2

A not-for-profit hospital provided charity care.The value of the hospital's service for the year,at its normal billing rates,was $4 million.How should the hospital report the charity care services in its financial statements?

Accepted Answer

A) include the $4 million as part of patient service revenue and report an operating expense (labeled Charity care)of $4 million. 
B) in the revenue section of the operating statement,include the $4 million as part of patient service revenue,but also show a deduction (labeled Charity care)for $4 million. 
C) report nothing for charity care,neither on the face of the operating statement nor in the notes 
D) report nothing on the face of the operating statement for charity care.In the notes,describe the charity care policy,and disclose the level of charity care provided based on the direct and indirect cost of providing the care. 
A) include the $4 million as part of patient service revenue and report an operating expense (labeled Charity care)of $4 million. 
B) in the revenue section of the operating statement,include the $4 million as part of patient service revenue,but also show a deduction (labeled Charity care)for $4 million. 
C) report nothing for charity care,neither on the face of the operating statement nor in the notes 
D) report nothing on the face of the operating statement for charity care.In the notes,describe the charity care policy,and disclose the level of charity care provided based on the direct and indirect cost of providing the care.

Question 3

Differences between a hospital's established rates and amounts negotiated with third-party payers are referred to as:

Accepted Answer

A) contractual adjustments 
B) unrecovered costs 
C) equity adjustments 
D) restricted revenues 
A) contractual adjustments 
B) unrecovered costs 
C) equity adjustments 
D) restricted revenues

Question 4

A not-for-profit hospital receives a $25,000 donation that must be used for a special training program for nurses.When the donated resources are used for the intended purpose,in which net asset classification should the hospital report the expense?

Accepted Answer

A) assets limited as to use 
B) temporarily restricted net assets 
C) unrestricted net assets 
D) permanently restricted net assets 
A) assets limited as to use 
B) temporarily restricted net assets 
C) unrestricted net assets 
D) permanently restricted net assets

Question 5

A hospital that carries no malpractice insurance has several outstanding malpractice claims,including one for $1.5 million.Hospital attorneys believe the claim can be settled in the range of $200,000 to $340,000,but negotiations have not reached the point where they can estimate where within that range they can reach agreement.How should the hospital handle this claim in its financial statements?

Accepted Answer

A) report nothing on the face of the statements;in the notes,state that there are claims against the hospital,and that historically it wins some cases and loses others. 
B) report an expense and a liability of $270,000,the mid-point of the range. 
C) report an expense and a liability of $340,000,the upper end of the range. 
D) report an expense and a liability of $200,000,the lower end of the range,and disclose the potential for additional loss in the notes to the statements. 
A) report nothing on the face of the statements;in the notes,state that there are claims against the hospital,and that historically it wins some cases and loses others. 
B) report an expense and a liability of $270,000,the mid-point of the range. 
C) report an expense and a liability of $340,000,the upper end of the range. 
D) report an expense and a liability of $200,000,the lower end of the range,and disclose the potential for additional loss in the notes to the statements.

Question 6

Shults Labs donates an item of prescription medications worth $100,000 to a local not-for-profit hospital.How should the hospital report the donation in its financial statements?

Accepted Answer

A) Report an other revenue (or gain)and an expense of $100,000. 
B) Report an other revenue (or gain)and an asset (inventory)of $100,000 
C) Report an asset and an other revenue (or gain)at the manufacturer's direct cost to produce the equipment,which is estimated at $70,000 
D) Report nothing on the face of the financial statements,but describe the donation in the notes to the statements. 
A) Report an other revenue (or gain)and an expense of $100,000. 
B) Report an other revenue (or gain)and an asset (inventory)of $100,000 
C) Report an asset and an other revenue (or gain)at the manufacturer's direct cost to produce the equipment,which is estimated at $70,000 
D) Report nothing on the face of the financial statements,but describe the donation in the notes to the statements.

Question 7

The difference between a hospital's established billing rate and the amount paid by a third-party payer is referred to as:

Accepted Answer

A) a bad debt 
B) a capitation agreement 
C) a charity allowance 
D) a contractual adjustment 
A) a bad debt 
B) a capitation agreement 
C) a charity allowance 
D) a contractual adjustment

Question 8

Which of the following statements is generally true about the basis of accounting used by governmental and not-for-profit hospitals?

Accepted Answer

A) both use the full accrual basis of accounting 
B) both use the modified accrual basis of accounting 
C) governmental hospitals use the modified accrual basis of accounting and not-for-profit hospitals use the full accrual basis of accounting 
D) both use the full accrual basis of accounting;but governmental hospitals also prepare a second modified accrual basis operating statement 
A) both use the full accrual basis of accounting 
B) both use the modified accrual basis of accounting 
C) governmental hospitals use the modified accrual basis of accounting and not-for-profit hospitals use the full accrual basis of accounting 
D) both use the full accrual basis of accounting;but governmental hospitals also prepare a second modified accrual basis operating statement

Question 9

Which three categories of net position are reported by governmental hospitals?

Accepted Answer

A) restricted,committed,and unassigned 
B) net investment in capital assets,restricted ,and unrestricted 
C) temporarily restricted,permanently restricted,and unrestricted 
D) permanently restricted,current,and noncurrent 
A) restricted,committed,and unassigned 
B) net investment in capital assets,restricted ,and unrestricted 
C) temporarily restricted,permanently restricted,and unrestricted 
D) permanently restricted,current,and noncurrent

Question 10

A governmental hospital has about 30 outstanding medical malpractice claims when it prepares its 2012 financial statements.It does not carry third-party insurance.The total amount claimed on these claims is $2,000,000.Historically,most of these claims are settled out-of-court for about 20 percent of the amount claimed.Some of claims were filed before 2012 and some were filed in 2012.It takes an average of three years to settle them.What is the appropriate method of handling this situation on the financial statements?

Accepted Answer

A) do not report anything either on the face or in the notes to the statements 
B) do not report anything on the face of the statements;but in the notes,state that claims were received,insurance is not carried,and it takes about three years to settle claims;say nothing about the amount of the claims or the potential loss 
C) develop a best estimate of the probable loss (about $400,000),based on past experience,and report a liability for that amount on the balance sheet 
D) report a liability of $2,000,000 on the balance sheet;and state in the notes that the liability may be lower if the hospital is successful in defending itself 
A) do not report anything either on the face or in the notes to the statements 
B) do not report anything on the face of the statements;but in the notes,state that claims were received,insurance is not carried,and it takes about three years to settle claims;say nothing about the amount of the claims or the potential loss 
C) develop a best estimate of the probable loss (about $400,000),based on past experience,and report a liability for that amount on the balance sheet 
D) report a liability of $2,000,000 on the balance sheet;and state in the notes that the liability may be lower if the hospital is successful in defending itself

Question 11

How do not-for-profit hospitals calculate "net patient service revenue," on their operating statements?

Accepted Answer

A) gross billings at established rates;minus contractual adjustments,charity care,and similar items that the hospital does not expect to collect 
B) gross billings at established rates;minus contractual adjustments,charity care,and other items,such as bad debts expense 
C) gross billings at established rates;minus any amounts that the hospital does not expect to collect;plus revenue from capitation premiums 
D) gross billings at established rates;revenue from capitation premiums;and any other revenue directly attributable to patient services such as special charges for TV 
A) gross billings at established rates;minus contractual adjustments,charity care,and similar items that the hospital does not expect to collect 
B) gross billings at established rates;minus contractual adjustments,charity care,and other items,such as bad debts expense 
C) gross billings at established rates;minus any amounts that the hospital does not expect to collect;plus revenue from capitation premiums 
D) gross billings at established rates;revenue from capitation premiums;and any other revenue directly attributable to patient services such as special charges for TV

Question 12

Catlett County Hospital,a governmental hospital,has its financial statement audit done by a local CPA firm.In 2012,the CPA firm announced that it would no longer charge for the audit.How is the County Hospital required to report the donated audit in 2013,assuming that it would have been billed $20,000 for the audit and that the cost incurred by the CPA firm is estimated at $11,000?

Accepted Answer

A) Report contribution revenue of $20,000 and audit fees of $11,000 
B) Report contribution revenue of $0 and audit fees of $0 
C) Report contribution revenue of $20,000 and audit fees of $20,000 
D) Report contribution revenue of $11,000 and audit fees of $11,000. 
A) Report contribution revenue of $20,000 and audit fees of $11,000 
B) Report contribution revenue of $0 and audit fees of $0 
C) Report contribution revenue of $20,000 and audit fees of $20,000 
D) Report contribution revenue of $11,000 and audit fees of $11,000.

Question 13

A not-for-profit hospital receives a $150,000 donation that must be used for a specific research project.The hospital anticipates that it will undertake the project next year.How should the hospital report the donation?

Accepted Answer

A) as unrestricted support 
B) as temporarily restricted support 
C) as assets limited as to use 
D) as permanently restricted support 
A) as unrestricted support 
B) as temporarily restricted support 
C) as assets limited as to use 
D) as permanently restricted support

Question 14

A not-for-profit hospital purchased an equity security for $150,000 on September,2012.When it prepared its 2012 financial statements,the security had a fair value of $145,000.It sold the security for $160,000 in 2013.What was the net effect of the sale of the security on the hospital's net assets in the year 2013?

Accepted Answer

A) no effect 
B) an increase of $10,000 
C) an increase of $15,000 
D) an increase of $160,000 
A) no effect 
B) an increase of $10,000 
C) an increase of $15,000 
D) an increase of $160,000

Question 15

In the statement of operations of a not-for-profit hospital,which of the following is not likely to be a factor in determining Excess of revenues over expenses?

Accepted Answer

A) net patient service revenue 
B) change in unrealized gains and losses on investments 
C) investment income 
D) provision for bad debts 
A) net patient service revenue 
B) change in unrealized gains and losses on investments 
C) investment income 
D) provision for bad debts

Question 16

Several high school seniors donate some time to a not-for-profit hospital.They perform services the hospital would not otherwise provide,such as reading to patients and wheeling them around hospital grounds.The hospital estimates the value of these services at $6,500 if they had paid the students the minimum wage and at $8,800 if they had paid at fair value.How should the hospital report these donated services on the face of its operating statement?

Accepted Answer

A) report donated revenue and expenses of $6,500. 
B) report neither donated revenue nor expenses. 
C) report donated revenue and expenses of $8,800. 
D) report donated revenue of $8,800 but do not report any expenses. 
A) report donated revenue and expenses of $6,500. 
B) report neither donated revenue nor expenses. 
C) report donated revenue and expenses of $8,800. 
D) report donated revenue of $8,800 but do not report any expenses.

Question 17

The accounting and financial reporting procedures for which fund category apply to governmental hospitals?

Accepted Answer

A) governmental type funds 
B) proprietary type funds 
C) fiduciary type funds 
D) restricted type funds 
A) governmental type funds 
B) proprietary type funds 
C) fiduciary type funds 
D) restricted type funds

Question 18

Which of the following is reported as an expense by not-for-profit hospitals?

Accepted Answer

A) charity care 
B) bad debts 
C) contractual adjustments 
D) volunteer and employee discounts 
A) charity care 
B) bad debts 
C) contractual adjustments 
D) volunteer and employee discounts

Question 19

A not-for-profit hospital purchased stock for $11,000 in March but by December 31,its fair value had dropped to $8,000.Assuming the hospital didn't sell the stock at December 31,how should the unrealized loss be reported in the hospital's operating statement?

Accepted Answer

A) it should report the loss below Excess of revenues over expenses 
B) it should report the loss as a direct addition to net assets 
C) it should report the loss before Excess of revenues over expenses 
D) it should not report the loss.The stock should be reported at cost. 
A) it should report the loss below Excess of revenues over expenses 
B) it should report the loss as a direct addition to net assets 
C) it should report the loss before Excess of revenues over expenses 
D) it should not report the loss.The stock should be reported at cost.

Question 20

In the statement of operations of a not-for-profit hospital,which of the following increases in net assets is not likely to appear as part of Excess of revenues over expenses?

Accepted Answer

A) net patient service revenue 
B) premium revenue under capitation agreements 
C) investment income 
D) net assets released from restrictions used for purchase of equipment 
A) net patient service revenue 
B) premium revenue under capitation agreements 
C) investment income 
D) net assets released from restrictions used for purchase of equipment

Which of the following is a major difference between a not-for-profit hospital's statement of operations and statement of changes in net assets?

A not-for-profit hospital provided charity care.The value of the hospital's service for the year,at its normal billing rates,was $4 million.How should the hospital report the charity care services in its financial statements?

Differences between a hospital's established rates and amounts negotiated with third-party payers are referred to as:

A not-for-profit hospital receives a $25,000 donation that must be used for a special training program for nurses.When the donated resources are used for the intended purpose,in which net asset classification should the hospital report the expense?

Shults Labs donates an item of prescription medications worth $100,000 to a local not-for-profit hospital.How should the hospital report the donation in its financial statements?

The difference between a hospital's established billing rate and the amount paid by a third-party payer is referred to as:

Which of the following statements is generally true about the basis of accounting used by governmental and not-for-profit hospitals?

Which three categories of net position are reported by governmental hospitals?

How do not-for-profit hospitals calculate "net patient service revenue," on their operating statements?

A not-for-profit hospital receives a $150,000 donation that must be used for a specific research project.The hospital anticipates that it will undertake the project next year.How should the hospital report the donation?

In the statement of operations of a not-for-profit hospital,which of the following is not likely to be a factor in determining Excess of revenues over expenses?

The accounting and financial reporting procedures for which fund category apply to governmental hospitals?

Which of the following is reported as an expense by not-for-profit hospitals?

A not-for-profit hospital purchased stock for $11,000 in March but by December 31,its fair value had dropped to $8,000.Assuming the hospital didn't sell the stock at December 31,how should the unrealized loss be reported in the hospital's operating statement?

In the statement of operations of a not-for-profit hospital,which of the following increases in net assets is not likely to appear as part of Excess of revenues over expenses?

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

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Exam 13: Accounting for Health Care Organizations

Which of the following is a major difference between a not-for-profit hospital's statement of operations and statement of changes in net assets?

A not-for-profit hospital provided charity care.The value of the hospital's service for the year,at its normal billing rates,was $4 million.How should the hospital report the charity care services in its financial statements?

Differences between a hospital's established rates and amounts negotiated with third-party payers are referred to as:

A not-for-profit hospital receives a $25,000 donation that must be used for a special training program for nurses.When the donated resources are used for the intended purpose,in which net asset classification should the hospital report the expense?

Shults Labs donates an item of prescription medications worth $100,000 to a local not-for-profit hospital.How should the hospital report the donation in its financial statements?

The difference between a hospital's established billing rate and the amount paid by a third-party payer is referred to as:

Which of the following statements is generally true about the basis of accounting used by governmental and not-for-profit hospitals?

Which three categories of net position are reported by governmental hospitals?

How do not-for-profit hospitals calculate "net patient service revenue," on their operating statements?

A not-for-profit hospital receives a $150,000 donation that must be used for a specific research project.The hospital anticipates that it will undertake the project next year.How should the hospital report the donation?

In the statement of operations of a not-for-profit hospital,which of the following is not likely to be a factor in determining Excess of revenues over expenses?

The accounting and financial reporting procedures for which fund category apply to governmental hospitals?

Which of the following is reported as an expense by not-for-profit hospitals?

A not-for-profit hospital purchased stock for $11,000 in March but by December 31,its fair value had dropped to $8,000.Assuming the hospital didn't sell the stock at December 31,how should the unrealized loss be reported in the hospital's operating statement?

In the statement of operations of a not-for-profit hospital,which of the following increases in net assets is not likely to appear as part of Excess of revenues over expenses?

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