Homework answers / question archive / Chapter 16 1)According to FASB standards, which of the following entities would not be considered a health care organization? A

Chapter 16 1)According to FASB standards, which of the following entities would not be considered a health care organization? A

Accounting

Share With

---

Chapter 16

1)According to FASB standards, which of the following entities would not be considered a health care organization?

A. The Heart Research Institute.

B. The St. George Hospital.

C. The Family Practice Medical Clinic.

D. The Northeast Health Maintenance Organization.

2) Which of the following is (are) considered an authoritative source of GAAP for nongovernmental not-for-profit health care entities?

A. The AICPA Audit and Accounting Guide Health Care Entities.

B. The Healthcare Financial Management Associations' Financial Accounting and Reporting Manual.

C. The FASB Accounting Standards Codification (ASC).

D. All of the above are considered GAAP according to the GAAP hierarchy.

3) Which of the following is not a financial statement prepared by nongovernmental not-for-profit health care entities?

A. Statement of changes in net assets.

B. Statement of revenues, expenses, and changes in net assets.

C. Balance sheet.

D. Statement of cash flows.

4) 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:

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.

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

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.

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

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.

7) The primary source of revenue for most hospitals is:

A. Nonexchange transactions, such as contributions.

B. Exchange transactions, such as fees for services.

C. Investment income.

D. Capitation fees from health maintenance organizations.

8) A hospital originally recorded all patient services it provided as a $500,000 debit to accounts receivable. Upon review the hospital determined that a contractual adjustment of $200,000 needs to be made, and estimated bad debts of $5,000 need to be recorded. In addition, at the time the receivable was recorded the hospital did not realize $100,000 should be considered charity services. Based on the information provided, what is the net amount of accounts receivable that the hospital would report on its financial statements?

A. $495,000.

B. $300,000.

C. $200,000.

D. $195,000.

9) Charity service and bad debts in a government hospital that follows business-type accounting are:

A. Both reported as deductions from gross patient revenue in arriving at net patient revenue.

B. Both reported as expenses.

C. Reported differently, with charity service disclosed in the notes to the financial statements and bad debts reported as a deduction from revenue.

D. Reported differently, with charity service reported as a deduction from gross patient revenue and bad debts reported as an expense.

10) Which of the following volunteer services is most likely to be reported by a nongovernmental not-for-profit hospital as contribution revenue and an expense?

A. Community members who plant flowers on the grounds once a year in the spring.

B. Volunteers in the gift shop who work a few hours a day serving customers.

C. Nurses from a religious organization who volunteer to assist in the care of critically ill children.

D. An accountant who is a member of the board of directors.

11) Which of the following could be included in the performance indicator measure provided by a nongovernmental not-for-profit hospital?

A. Contribution to an endowment.

B. Gain on sale of equipment.

C. Grant restricted for diabetes research.

D. Interest income that is temporarily restricted.

12) Which of the following would usually be considered as temporarily restricted net assets in a nongovernmental not-for-profit hospital?

A. Funds designated by the board of directors for future equipment purchases.

B. Donated services by senior citizens.

C. A permanent endowment received from the city's leading citizen.

D. A research grant from the federal government to study high blood pressure.

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

A. Statement of changes in net assets.

B. Statement of operations.

C. Balance sheet.

D. Similar to governmental health care entities, it would not report the change on the face of a financial statement.

14) Contractual Adjustments is properly characterized as:

A. An expense.

B. An other financing use.

C. A liability.

D. A contra revenue.

15) In accordance with the FASB Codification, donated medicines that normally would be purchased by a hospital should be recorded at fair value and credited to which of the following?

A. Net Patient Service Revenue.

B. Other Revenue.

C. Nonoperating Gains.

D. Deferred Revenues.

16) An annual contributor to a nongovernmental not-for-profit hospital made an unrestricted pledge in October 2016 that will be paid in March 2017. Assuming the hospital's fiscal year-end is December 31, 2016, the pledge should be credited to:

A. Contributions—Temporarily Restricted in 2016.

B. Contributions—Unrestricted in 2016.

C. Contributions—Temporarily Restricted in 2017.

D. Contributions—Unrestricted in equal amounts in 2016 and 2017.

17) How would the cash acquisition of equipment be reported on a health care entity's statement of cash flows?

A. Investing activity applying GASB standards.

B. Investing activity applying FASB standards.

C. Financing activity applying FASB standards.

D. Operating activity applying GASB standards.

18) Where would a capitation fee be reported on a health care entity's financial statements?

A. Service revenue.

B. Other professional expense.

C. Other revenue.

D. Short-term liability.

19) In accordance with the FASB Codification, which of the following would be an appropriate performance indicator for a not-for-profit health care organization?

A. Revenues.

B. Excess of revenues and gains over expenses and losses.

C. Expenses and losses.

D. Contributions to long-lived assets.

20)  The GASB requires business-type health care organizations to prepare which of the following financial statements?

A. Statement of revenues, expenses, and changes in net position; statement of net position; and statement of cash flows.

B. Statement of operations; statement of net assets; and a statement of cash flows.

C. Statement of revenues, expenses, and changes in net position; and statement of net position.

D. Statement of activities; statement of net position; statement of changes in net position; and statement of cash flows.

21) Which of the following statements concerning the Patient Protection and Affordability Act (also known as the Affordable Care Act) is true?

A. Since the Act primarily focuses on the insurance industry there is little impact on health care accounting.

B. Since the Act is a federal law it only affects governmental health care facilities.

C. Since all portions of the Act have only recently been enacted the full impact on health care accounting is unknown.

D. The Act will have no impact on a nongovernmental hospital's Internal Revenue Service filing of the Form 990, since the Act is not under the oversight of the Internal Revenue Service.

22) Which of the following is shown on a statement of changes in net assets?

A. An increase in temporarily restricted net assets.

B. A gain on the sale of equipment.

C. A loss from a discontinued operation.

D. An unrestricted contribution.

23) Which of the following would be considered service revenue of a health care entity?

A. Revenue from the hospital cafeteria.

B. Capitation fees received from a health maintenance organization.

C. Fee revenue received for providing medical transcripts.

D. Revenue received for the rental of an assisted living facility's conference room to a local not-for-profit.