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HS Final

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

True

T/F: Delaying or accelerating payments will not impact expenses if using accrual based accounting.

True

T/F: Fraud usually makes no difference or impact on an organization's Balance Sheet.

True

T/F: Inventory is less liquid than receivables.

True

T/F: Inventory management is the movement of products in stock and should always use the FIFO method no matter the costing method used.

True

T/F: Net Realizable Value is based on someone's subjective estimate of what the entity could be sold for.

True

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

True

T/F: Nominal accounts zero their balances prior to the next reporting period.

True

T/F: Non-profits have to have CPA audited financial statements.

True

T/F: Non-profits need to disclose how liquid their organization is.

True

T/F: The SEC is concerned with correct arithmetic and consistent accounting practices.

True

T/F: The Statement of Operations and the Income Statement are the same document?

True

An executive for a healthcare organization would prefer that someone make a donation to which type of fund account?

Unrestricted Fund Account

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

bundled payment

Amortization

spreading out the cost of a large purchase over time

Book Value Formula

useful life of the asset X (1/2 or 1/1.75 or 1/1.5) *dependong on rate

Accounts receivable net is gross charges less what items?

Contractual allowance, bad debts

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

False

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

False

T/F: Financial statements are the responsibility of the auditor or CPA

False

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

Materiality

The ___________________shows revenues and expenses over the entire accounting period.

Operating statement

Abuse

Practices that result in unnecessary costs

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

False

T/F: It is the accountant's responsibility to make sure a future investor understands the financial statements of the organization.

False

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

False

T/F: Organizations must always have enough cash on hand to pay off stockholder's equity.

False

T/F: Real accounts are zeroed out after the reporting year has ended.

False

T/F: Retained earnings is "cash on hand" for an organization to reinvest back into operations.

False

What are the three sections of the Statement of Cash Flows?

Financing activities, investing activities and operating activities

What are the 3 types of cash flows shown on the Statement of Cash Flows?

Financing, investing and operating

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

Going Concern

GAAP requires assets such as Property, Plant and Equipment to be based on what type of cost valuation method?

Historical cost

T/F: A "certified statement" means the documents reviewed are error free and correct.

False

T/F: A good strategy is to maximize an organization's liquidity and solvency

False

T/F: A system of checks and balances make it easy to defraud and embezzle from an organization.

False

T/F: An auditor reviews all documents to determine accuracy.

False

Given an invoice with the terms: 5/10 net 30 for $3000. What would be the cost of missing the deadline? Otherwise known as the interest expense.

$150

T/F: Charity Care and Bed Debt Expense are the same in Accrual Accounting.

False

Purchased: 1/15 2units @ $75.00/each6/15 2 units @ $150.00/each8/15 1 unit @ $80.00/each10/15 1 unit @ $100/each Using specific identification if 3 units were sold for $500/each what would be the profit generated?

$1,200

Given a beginning inventory of 10 units @ $4/each the following purchases were made: 10 units 3/21 @ $5.00/each11 units 11/14 @ $6.00/each6 units 6/16 @ $5.00/each25 units 2/15 @ $4.50/each5 units 12/15 @ $8/each If 50 units were sold @ $25.00/piece What is the revenue generated?

$1,250

Given a beginning inventory of 10 units @ $4/each the following purchases were made:10 units 3/21 @ $5.00/each11 units 11/14 @ $6.00/each6 units 6/16 @ $5.00/each25 units 2/15 @ $4.50/each5 units 12/15 @ $8/each If 50 units were sold @ $25.00/each. What is the inventory valuation based on LISH?

$111

A piece of equipment was purchased on 1/1/20X1. It has a useful life of 5 years and salvage value of 10%. Accumulated depreciation amounted to $100,000 on 12/31/20X5. What was the purchase price (historical cost) of the item?

$111,111

Jerry bought a new tractor for $40,000 for his landscaping business. He thinks it will last him 5 years at which time he will sell if for scrap for $750.00. Using the Double Declining Balance method of depreciation what is his depreciation expense for years 1 and 3 respectively?

$16,000 and $5,760

Given: 12/15/2021 Purchased 10 units @ $15.00/ea 1/15/2021 Purchased 5 units @ $5.00/ea Beginning Balance of 10 units @ $3.50/ea 3/15/2021 Purchased 25 units @ $10/ea 6/15/2021 Purchased 20 units @ $12.50/ea Sold 45 units @ $75.00/each What is the profit using the weighted average costing method

$2,918.70

Given a beginning inventory of 10 units @ $4/each the following purchases were made: 10 units 3/21 @ $5.00/each11 units 11/14 @ $6.00/each6 units 6/16 @ $5.00/each25 units 2/15 @ $4.50/each5 units 12/15 @ $8/eachIf 50 units were sold @ $25.00/each. Using FIFO what is the cost of goods sold?

$227.50

Using the information from the SYD problem Purchase Price: $325,000 Useful Life of 5 years Salvage Value of $5,000 What is the accumulated depreciation through year 3

$256,000

$267

Jones Services bought a new building on 9/15/20X1 for $950,000 with a Salvage Value of $50,000 and Useful Life of 30 years. The land was valued at $275,000. Using the Straight Line method of depreciation what is the book value of the land in 20X5?

$275,000

$3,375

Purchased: 1/15 2units @ $75.00/each6/15 2 units @ $150.00/each8/15 1 unit @ $80.00/each10/15 1 unit @ $100/each Using specific identification if three units were sold what is the remaining inventory valuation?

$330

Given: 1/15/2021 purchased 1 unit $950; 9/15/202 purchased 4 units $900/ea; 3/15/2021 purchased 3 units $800/each; 12/2/2021 purchased 2 units $970/ea. Using specific identification what is the COGS? Selling 5 units at $1600/each?

$4,250

A piece of equipment was purchased for $65,000 on 1/1/20X1 and has a salvage value of 20% and expected useful life of 10 years. Using the DDB method of depreciation, what is the book value of the item end of year 2 (beginning of year 3)?

$41,600

$456.30

A piece of equipment was purchased for $65,000 on 1/1/20X1 and has a salvage value of 20% and expected useful life of 10 years. What is the straight line depreciation amount per year?

$5,200

Given a beginning inventory of 10 units @ $4/each the following purchases were made: 10 units 3/21 @ $5.00/each11 units 11/14 @ $6.00/each6 units 6/16 @ $5.00/each25 units 2/15 @ $4.50/each5 units 12/15 @ $8/each What is the average price per unit of the total inventory that year.

$5.05

Using the Sum of Years Digits method find the depreciation in year 3 for the following: Purchase Price: $325,000 Useful Life of 5 years Salvage Value of $5,000

$64,000

Again using the same information from the SYD problem Purchase Price: $325,000 Useful Life of 5 years Salvage Value of $5,000 What would be the book value of the item after 3 years of SYD depreciation?

$69,000

Given a beginning inventory of 10 units @ $4/each the following purchases were made:10 units 3/21 @ $5.00/each11 units 11/14 @ $6.00/each6 units 6/16 @ $5.00/each25 units 2/15 @ $4.50/each5 units 12/15 @ $8/each If 50 units were sold @ $25.00/each. What is the inventory valuation using FISH?

$71.50

The difference between profits of LIFO and FIFO are $2500.00. If the corporation is at a 30% tax rate, what is the cost savings using the LIFO method instead of the FIFO method.

$750

Given: 12/15/2020 10 units @ $13 6/15/2020 10 units @ $9 1/15/2020 10 units @ $5 3/15/2020 20 units @ $7 9/15/2020 20 units @ $11 52 units were sold for $15.50/unit What was the revenue generated over the year?

$806

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

Book value

The "near term" or "short term" in accounting means _____ or less:

12 months

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

Given a beginning inventory of 68 units and purchases of 42 units what is the ending inventorybalance if the organization sold 86 units over the year?

24 units

Amortization v. Depreciation:

Amortization: expenses INTANGIBLE items, directly reduces the asset in the balance sheet Depreciation: expenses TANGIBLE assets, indirectly reduces the asset via an accumulated depreciation account

What types of accounts are real accounts?

Assets, liabilities, equity

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

Automatically

Financial accounting looks:

Backward

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

Balance Sheet

Which statement is the best evaluator of an organization's current financial status?

Cash Flow Statement

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

Charity care, contractual allowances, discounts

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 service and the amount agreed to by the provider and the third party payer is:

Contractual allowance

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

Cost

What are the Three types of Inflation? - 3 Answers to this question.

Cost-push, Demand-pull, cost-pull?

Which depreciation method ignores salvage value?

Declining balcance depreciation

What costs can be capitalized to an asset?

Delivery fees, installation costs, salesperson commission, major maintenance overhauls

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

Equipment, Plant, Property

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

Fair value accounting

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

Full Disclosure

As an accountant putting forward financial statements; they should follow which three guiding principles:

GAAP rules, Federal/State regulations, Full Disclosure

The users of financial statements are:

Investors, bankers, stockholders, suppliers

Fraud

Knowingly submitting false statements or making misrepresentations of fact to obtain a federal health care payment for which no entitlement would otherwise exist, knowingly soliciting, paying, and/or accepting remuneration to induce or reward referrals for items or services reimbursed by Federal health care programs or making prohibited referrals for certain designated health services.

The idea that one will not be able to replace inventory items for lower costs because of inflation is the basis of which inventory costing method?

LIFO

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

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

Limited liability

Assets are presented on the Balance sheet in order of:

Liquidity

What are the three ways to value a business?

Market approach, Cost approach, Intrinsic Value Approach

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

Matching

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

Net Patient Services Revenue

Based on evidence that reasonable individuals would agree upon

Objective Evidence

Lower __________________ lead to lower taxes.

Profits

What type of valuation method would one use to determine insurance coverage needs?

Replacement Cost

Money received or earned for goods or services provided are known as:

Revenue

Representing inflation as balloons, one balloon will rise and what will the others do in response?

Rise also

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

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