Healthcare Accounting Final Study Guide

¡Supera tus tareas y exámenes ahora con Quizwiz!

Sum of Years Digits Depreciation

Takes the number of years of useful life of an asset, counts back to one, and adds the digits together. This method depreciates more in the first few years of an asset than the others. Ex: UL=3 HC=10,000 SV=2,000 1+2+3= 6 10,000-2,000= 8,000 8,000 x 3/6 = 4,000 (year 1) 8,000 x 2/6 = 2,666.66 (year 2) 8,000 x 1/6 = 1,333.33 (year 3) What's the book value for year 2? 10,000 - (4,000 + 2,666.66) = 3,333.34

Resources owned by the organization that have physical form.

Tangible assets

Fiscal Year

The 12 month time-frame an organization chooses based on seasonal influences.

Marketable securities are current assets.

True

Net Realizable Value is based on someone's subjective estimate of what the entity could be sold for.

True

No matter which depreciation schedule is used the journal entries for the initial purchase will remain the same.

True

Non-profits have to have CPA audited financial statements.

True

Non-profits need to disclosure how liquid their organization is.

True

Owners equity and net assets are the same thing in accounting terminology.

True

The SEC is concerned with correct arithmetic and consistent accounting practices.

True

The accounting equation must remain in balance

True

The statement of operations and the income statement are the same document?

True

The strength of historical cost valuation is that it is objective and verifiable.

True

Using the accrual method of accounting will require a Statement of Cash flows.

True

Whether for profit or not-for-profit, health organizations need profits.

True

Financial Accounting looks

backward

The historical cost of an item less the accumulated depreciation of the item is known as:

book value

A lump-sum amount that is less than would be paid in total on a fee-for-service basis is a:

bundled payment

Correct Externalities

cost benefits/affect a third party that didn't choose to participate

A system of accounting where each entity has its own set of financial records and statements.

fund accounting

Statements are prepared based on assumption of longevity. If that is not likely the case then it must be disclosed.

going concern

Liability Classification

refers to whether an account is current or long-term

Inventory is less liquid than receivables.

True

Financial statements are the responsibility of the auditor or CPA

False

Declining Balance Depreciation Formula

Historical cost / useful life of assets (More complicated than it looks)

If an individual would make a different decision based on the incorrect information resulting in an error.

Materiality

Asset Classification

Might be: income earned by an organization over the years that was not distributed

Imperfect information

One party is more informed than another in a transaction

Retained Earnings

Presents changes in equity of a period of time

What is the equation for profit?

Profit = Total Revenue - Total Expenses

There would be a journal entry for: 10/15/20X1 ordered supplies in the amount of $45,000.

False

What are 3 types of cash flows shown on the statement of cash flows?

Financing, investing, and operating

I want to use the future profits valuation to determine how much insurance coverage I should have on an entity

False

I want to use the future profits valuation to determine how much insurance coverage I should have on an entity.

False

Fixed Assets

property, plant, and equipment

If providers give away care (free or charity), they can include the amount they would have charged as revenue.

False

Most undetected fraud is "material" in accounting.

False

Net Assets (equity) is the cash an organization has to invest for its future.

False

Nominal accounts are zeroed out after the reporting year has ended.

False

Organizations must always have enough cash on hand to pay off stockholder's equity.

False

Presidential executive orders remain in full force forever.

False

The users of financial statements are

All of the choices are correct. (Suppliers, bankers, investors, and stockholders)

Internal control means the system is designed to catch and correct errors:

All the time

Nonmaleficence

"First, do no harm"

Given Liabilities of $185,000 and Equity of $205,000. What are the Assets:

$390,000

Giving an invoice with the terms: 2/12 net 30 for $2600. What would be the cost of missing the deadline? Otherwise known as the interest expense.

$52.00

Given Revenue of $75,000 and Profit of $15,000 what were Expenses over the given period?

$60,000

straight line depreciation formula

(Historical cost - salvage value) = total depreciation/ useful life

The "near-term", "short term", or "current" in accounting means ____________ or less.

12 months

Medicare was implemented in which year?

1966

There are how many methods to calculate the Statement of Cash Flows?

2

Given the terms: 5/15 net 30 what would be the discount from the vendor if paid immediately after receipt of invoice?

5 percent

A cooperative grouping of healthcare providers are known as:

ACO's or Accountable Care Organizations

The journal entry for: Patients were billed $25,000 for services rendered during the month. Would entail which two accounts?

Accounts receivable and routine services revenue

Refers to a period of less than one year:

All choices are correct ( near-term, short-term, and current)

Cash accounting would recognize a transaction when:

All choices are correct (Wages are paid, cash paid for supplies, cash received for services, and a loan is taken for new machinery)

Net Patient Services Revenue is what the organization is legally entitled to collect. Original charges are reduced by:

All choices are correct (Contractual allowance, discounts, and charity care)

The Sarbanes-Oxley Act:

All choices are correct (Requires disclosure of conflicts of interest, provides protection for whistleblowers, and requires periodic rotation of auditors.)

Contributed Capital

Amounts individual Ms have paid directly to the organization in stocks or bonds

The fundamental accounting equation is:

Assets = Liabilities + Equity

Which financial statement is a "snapshot" of the organizations financial health?

Balance sheet

Accounts receivable net is gross charges less what items?

Contractual allowance and bad debts

Consideration should be given to risks the organization faces.

Conservatism

Use of the same accounting method from period to period.

Consistency

The difference between a providers posted charge for service and the amount agreed to by the provider and third party payer is a:

Contractual allowance

This fee is usually due at the time of service in order to see a provider:

Copayment

The value of what was given up to acquire the item.

Cost

The "donut hole" was fixed in 2003 with the addition of Medicare Part ______.

D

The unit for which we wish to account. This can be a person, department, project, division or organization. It is defined as an:

Entity

GAAP requires the use of historical valuation for which types of assets.

Equipment, plant, and property.

Monopoly

Exclusive possession or control of the supply or trade in a commodity or service.

Stock and bonds that an entity invests in are valued on the balance sheet using which valuation method?

Fair value accounting

A "certified statement" means the documents reviewed are error free and correct.

False

A good strategy is to maximize an organizations liquidity and solvency.

False

A mortgage is considered a notes payable and is an expense account.

False

An auditor reviews all documents to determine accuracy.

False

Cash is increased by a credit and decreased by a debit.

False

Charges are the same as revenues in accounting.

False

Current assets and liabilities at the top of the balance sheet gives the reader a quick assessment of solvency.

False

Depreciation expense and accumulated depreciation are the same in types of accounts in accounting.

False

Depreciation is the same as money in the bank.

False

Equity is the amount of money I have in the bank (cash) after I account for my assets and liabilities.

False

Public Goods

For the benefit of the public

Managerial Accounting looks

Forward

Reports should disclose any information needed to ensure that they are fair representations

Full Disclosure

GAAP requires assets such as property, plant, and equipment to be based on what type of cost valuation method?

Historical cost

The _________ shows revenues and expenses over the entire accounting period.

Income statement

Balance Sheet

Indicates financial position of an organization at a specific point in time

This type of asset results in substantial valuation difficulties because it has no physical form.

Intangible assets

A ____________ combines account balances from the beginning of the reporting period as well as journal entries for that recording period.

Ledger

When using "mark-to-market" valuation which GAAP method is preferred?

Level 1

Obligations of the organization to outside creditors.

Liabilities

_________________ protects owners of a cooperation from being personally liable for the debts of the corporation.

Limited liability

The first item listed on healthcare financial statements and reflects the adjustments of charity care and contractual adjustments is know as:

Net Patient Services Revenue

Based on evidence that reasonable individuals would agree upon.

Objective evidence

Beneficence

Obligation to bring about good in all our actions.

Long-term Liabilities

Obligations due that will take over a year to repay

Unrestricted Net Assets

Profit generated from daily operations as well as unrestricted donations.

The two overriding goals of financial management are ____________ and ___________.

Profitability and Viability

Autonomy

Respect for decisions made by others concerning their own lives.

Viability is measured by ___________ and ___________.

Solvency and Liquidity

The ___________ shows where an organization generates its cash and uses it over the accounting period.

Statement of cash flows

What is the term for a claim that an outside investor has on an organization.

Stockholder's equity

The reason for government regulation is:

The market cannot allocate resources effectively.

Given the following journal entry: Employees were paid wages of $75,000 during the period. There would be a credit to wages and salaries expense account

True

All elements of a financial event are known as:

Transaction

Accrual accounting is much less open to manipulation of profits.

True

Accumulated depreciation is a contra-asset account.

True

All stock for an organization should at least be initially issued for the par value to reduce owner liability.

True

Delaying or accelerating payments will not impact expenses if using accrual based accounting.

True

Depreciation is a known "tax shelter" and is completely "legal."

True

Double entry means that it is not possible to change one side of the accounting equation without changing the other.

True

Fraud usually makes no difference or impact on an organization's Balance Sheet.

True

Higher risk ventures should bring higher returns.

True

Assets are presented on the Balance sheet in order of:

liquidity

Expenses should be recorded in the same period as the revenues they were responsible for generating.

matching

Income Statement

might be: Refers to the liquidity of the account

Justice

obligation to provide others what they are owed or deserved.

Insurance companies and government agencies that pay the majority of the cost of treating patients are known as:

third-party payers


Conjuntos de estudio relacionados

intro to Business entrepreneur final exam review

View Set

Insulin types (Onset, Peak, Duration) Mnemonic

View Set

Geography 3.02: Where Is Southeast Asia and The Pacific?

View Set

Mobile Application Development - Android - 3660 Final

View Set

Chapter 1 concepts modern project management

View Set

Chapter 54, Care of Patients with Esophageal Problems

View Set