Question 1

Both governmental owned and private health care providers use the modified accrual basis of accounting and the economic resources measurement focus.

Accepted Answer

A) True 
 B)False

Question 2

Voluntary health and welfare organizations raise a significant amount or nearly all of their resources from contributions and grants, and are subject to the rules of the AICPA Not-for-Profit Guide.

Accepted Answer

A) True 
 B)False

Question 3

The AICPA Health Care Guide provides additional guidance regarding accounting and reporting requirements for voluntary health and welfare organizations.

Accepted Answer

A) True 
 B)False

Question 4

Not-for-profit health care entities are distinguished from voluntary health and welfare organizations in the following manner:

Accepted Answer

A)  Health care organizations do not provide services to individuals who are unable to pay. 
B)  Health care organizations provide health care services while voluntary health and welfare organizations do not. 
C)  Health care organizations use accrual accounting whereas voluntary health and welfare organizations do not. 
D)  Health care organizations are considered to be primarily business-oriented whereas voluntary health and welfare organizations raise a significant portion of their money from voluntary contributions.

Question 5

St. Mary's Medical Center performed charity care at a cost supplies etc. of $21,000. The standard charge to patients for these services is $63,000. How much should the hospital recognize as revenue?

Accepted Answer

A)  No revenue should be recognized. 
B)  $ 42,000. 
C)  $ 21,000. 
D)  $63,000.

Question 6

Which of the following health care organizations have "Category B" GAAP established by the AICPA's Audit and Accounting Guide: Health Care Organizations?

Accepted Answer

A)  Cook County Hospital, a department of Cook County. 
B)  Kishwaukee Hospital, a nongovernmental, not-for-profit hospital. 
C)  Open Door Urgent Care, a privately owned for-profit organization. 
D)  All of the above.

Question 7

Private not-for-profit health care organizations include what categories in the equity section of the Statement of Changes in Net Assets?

Accepted Answer

A)  Paid in capital and retained earnings. 
B)  Net investment in capital assets, restricted, and unrestricted. 
C)  Operating, investing, financing. 
D)  Unrestricted, temporarily restricted, and permanently restricted.

Question 8

The level of charity care is included in revenue and should be disclosed in the notes to financial statements.

Accepted Answer

A) True 
 B)False

Question 9

Private sector not-for-profit health care entities must disclose expenses by their functional classifications program and supporting in the notes, if not provided in the Statement of Operations.

Accepted Answer

A) True 
 B)False

Question 10

It is the policy of St. David's Hospital, a not-for-profit business oriented hospital, is to record all gifts, bequests, and investment income as Nonoperating Income. Nonoperating revenues related to undesignated resources amounted during the year is as follows: 25,000 in unrestricted gifts and bequests, $18,000 in unrestricted income on endowment investments and $3,800 from income on investments other than endowment.
What is the correct journal entry to record this event?

Accepted Answer

The answer of It is the policy of St. David's...

Question 11

When accounting for health care organizations, services provided for charity care are:

Accepted Answer

A)  Recorded as revenues but the costs are expensed as normal. 
B)  Must be disclosed in the notes to the financial statements. 
C)  Not recorded as revenues and the costs are not expensed. 
D)  None of the above.

Question 12

The equity section of the Statement of Net Assets of a private not-for-profit hospital may contain which of the following descriptions?

Accepted Answer

A)  Fiduciary, Proprietary, and General. 
B)  Nonspendable, Committed, Restricted and Assigned. 
C)  Permanently Restricted, Temporarily Restricted, and Unrestricted. 
D)  Net Investment in Capital Assets, Restricted, and Unrestricted Net Position.

Question 13

Private sector not-for-profit health care entities must disclose expenses by functional classifications, if not provided in the Statement of Operations.

Accepted Answer

A) True 
 B)False

Question 14

What is the basis of accounting for hospitals and other health care organizations, and what organizations are responsible for setting Category A GAAP?

Accepted Answer

The answer of What is the basis of accounting for...

Question 15

The equity section of governmentally-owned hospitals includes net investment in capital assets, restricted, and unrestricted net position.

Accepted Answer

A) True 
 B)False

Question 16

St. Mary's Hospital is a not-for-profit business oriented hospital. During the year, premium revenue from capitation agreements amounted to $220,000, all of which was received in cash. Other Operating revenues, also collected in cash, are: $5,300 from the gift shop, $7,160 from parking lot fees, $3,700 from cafeteria operations and $29,300 from tuition. What is the appropriate journal entry to record this event? $\begin{array}{lrr}
\text { A) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Operating revenues-Unrestricted-Other Revenue } && 45,460 \
\text { B) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Operating revenues-Restricted-Other Revenue } && 45,460 \
\text { C) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Operating revenues-Unrestricted-Other Revenue } && 16,160 \
~~~\text { Operating revenues-Restricted-Other Revenue } && 29,300 \
\text { D) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Non-Operating revenues-Unrestricted-Other Revenue } && 45,460
\end{array}$

Accepted Answer

The answer of St. Mary's Hospital is a not-for-profit business...

Question 17

While the different types of health care organizations follow different sets of generally accepted accounting standards, the differences lie mainly in presentation. Which of the following statements is accurate?

Accepted Answer

A)  Not-for-Profit Business-Oriented Organizations and Investor-Owned Health Care Enterprises must prepare a Balance Sheet or Statement of Financial Position and the equity section consists of paid-in capital and retained earnings. 
B)  Not-for-Profit Business-Oriented Organizations and Government Health Care Organizations must prepare a Statement of Net Positon and Statement of Revenues, Expenses and Changes in Fund Balance. 
C)  Investor-Owned Health Care Enterprises and Government Health Care Organizations must prepare a Statement of Cash Flows and Notes to the Financial Statements 
D)  Not-for-Profit Business-Oriented Organizations and Government Health Care Organizations must follow GASB standards while Investor-Owned Health Care Enterprises must follow FASB standards.

Question 18

A donor contributed $1,000,000 to a not-for-profit hospital with the restriction that the funds be invested indefinitely and the income be used for cancer research. Which of the following would be true?

Accepted Answer

A)  The gift would be recorded as an increase in permanently restricted net assets. 
B)  The income from the endowment would be recorded as an increase in temporarily restricted net assets. 
C)  Both a) and b) above. 
D)  Neither a) nor b) above.

Question 19

The difference between accounting for private not-for-profit hospitals and government- owned hospitals is:

Accepted Answer

A)  Government owned hospitals do not have to prepare a Statement of Cash Flows. 
B)  Government owned hospitals do not have to record depreciation. 
C)  The equity accounts have different titles and definitions. 
D)  All of the above.

Question 20

Which of the following is true regarding accounting and financial reporting for not-for-profit health care organizations?

Accepted Answer

A)  Charity care is reported as operating revenue at the normal and customary rate and bad debt expense is reported for an equal amount. 
B)  Contractual adjustments with insurance companies are reported as a reduction in patient service revenue. 
C)  Both a and b above. 
D)  Neither a nor b above.

Exam 12: Accounting for Hospitals and Other Health Care Providers

Both governmental owned and private health care providers use the modified accrual basis of accounting and the economic resources measurement focus.

Voluntary health and welfare organizations raise a significant amount or nearly all of their resources from contributions and grants, and are subject to the rules of the AICPA Not-for-Profit Guide.

The AICPA Health Care Guide provides additional guidance regarding accounting and reporting requirements for voluntary health and welfare organizations.

Not-for-profit health care entities are distinguished from voluntary health and welfare organizations in the following manner:

St. Mary's Medical Center performed charity care at a cost supplies etc. of $21,000. The standard charge to patients for these services is $63,000. How much should the hospital recognize as revenue?

Which of the following health care organizations have "Category B" GAAP established by the AICPA's Audit and Accounting Guide: Health Care Organizations?

Private not-for-profit health care organizations include what categories in the equity section of the Statement of Changes in Net Assets?

The level of charity care is included in revenue and should be disclosed in the notes to financial statements.

Private sector not-for-profit health care entities must disclose expenses by their functional classifications program and supporting in the notes, if not provided in the Statement of Operations.

When accounting for health care organizations, services provided for charity care are:

The equity section of the Statement of Net Assets of a private not-for-profit hospital may contain which of the following descriptions?

Private sector not-for-profit health care entities must disclose expenses by functional classifications, if not provided in the Statement of Operations.

What is the basis of accounting for hospitals and other health care organizations, and what organizations are responsible for setting Category A GAAP?

The equity section of governmentally-owned hospitals includes net investment in capital assets, restricted, and unrestricted net position.

While the different types of health care organizations follow different sets of generally accepted accounting standards, the differences lie mainly in presentation. Which of the following statements is accurate?

A donor contributed $1,000,000 to a not-for-profit hospital with the restriction that the funds be invested indefinitely and the income be used for cancer research. Which of the following would be true?

The difference between accounting for private not-for-profit hospitals and government- owned hospitals is:

Which of the following is true regarding accounting and financial reporting for not-for-profit health care organizations?