Question 1

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

Accepted Answer

A)  Statement of changes in net assets. 
B)  Statement of operations. 
C)  Balance sheet. 
D)  Similar to governmental health care entities,it would not be required to show the increases on the statement.

Question 2

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

Accepted Answer

A)  Deductions from gross patient revenue in arriving at net patient revenue. 
B)  Disclosures in the notes to the financial statements. 
C)  Either deductions from gross patient revenue or disclosure in the notes,depending on the dollar amount of the adjustments relative to billings. 
D)  Bad debt expense.

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Under GASB and FASB standards health care entities would apply the same criteria for recognizing and reporting donated services.

Accepted Answer

A) True 
 B)False

Question 5

Contingencies that are unique to health care providers arise from malpractice claims,risk contracting,and payor payment programs,obligations to provide uncompensated care,and contractual agreements with physicians.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

The answer of What auditing issues are of particular significance...

Question 7

Donated medicines that normally would be purchased by a hospital should be recorded at fair market value and should be credited to

Accepted Answer

A)  Net Patient Service Revenue. 
B)  Other Revenue. 
C)  Nonoperating Gains. 
D)  Deferred Revenues.

Question 8

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

Accepted Answer

The answer of Explain how one can evaluate both the...

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would be an appropriate performance indicator for a not-for-profit health care organization?

Accepted Answer

A)  Revenues. 
B)  Excess of revenues and gains over expenses and losses. 
C)  Expenses and losses. 
D)  Contributions to long-lived assets.

Question 11

Congress mandated diagnosis-related groups (DRGs)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.

Accepted Answer

The answer of Congress mandated diagnosis-related groups (DRGs)as a method...

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Describe what prepaid health care plans are and some of the related accounting issues.

Accepted Answer

The answer of Describe what prepaid health care plans are...

Question 14

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

Accepted Answer

A)  DRGs are the basis for a cost accounting method that groups costs together by departments performing the services. 
B)  A DRG is a case-mix classification scheme that is used to determine the payment provided to the hospital for inpatient services,regardless of how much the hospital spends to treat a patient. 
C)  The federal Medicare system of retroactive payment for services depends on DRGs. 
D)  The DRGs method is the prevailing practice of billing third-party payors for a health care organization's average cost for providing care for locally defined similar medical conditions.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  Cash donated for an endowment. 
B)  Cash from a federal research grant,which is to be used for water quality research. 
C)  Cash the board of directors has designated for equipment acquisitions. 
D)  Cash contributions that are to be used for the building fund.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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 to 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.

Accepted Answer

The answer of Show entries in general journal form for...

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?

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

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.

Under GASB and FASB standards health care entities would apply the same criteria for recognizing and reporting donated services.

Contingencies that are unique to health care providers arise from malpractice claims,risk contracting,and payor payment programs,obligations to provide uncompensated care,and contractual agreements with physicians.

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

Donated medicines that normally would be purchased by a hospital should be recorded at fair market value and should be credited to

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

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

Which of the following would be an appropriate performance indicator for a not-for-profit health care organization?

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

Describe what prepaid health care plans are and some of the related accounting issues.

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

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

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

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

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.

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