Healthcare Accounting Final Review

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

fixed assets

assets that are relatively permanent, such as land, buildings, and equipment

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

automatically

Financial Accounting looks

backwards

Accounts receivable net is gross charges less what items?

bad debts and contractual allowance

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

balance sheet

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

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

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

false, ordering would not be on the journal entry.

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

fund accounting

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

revenue

The ___________________shows revenues and expenses over the entire accounting period.

statement of cash flows

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

stockholders' equity

The users of financial statements are:

stockholders, bankers, investors, suppliers

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

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 Statement of Operations and the Income Statement are the same document?

true

The accounting equation must always remain in balance

true

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

Materiality

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

false

Presidential executive orders remain in full force forever

false

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

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

true

Given Liabilities of $185,000 and Equity of $205,000 what are Assets:

$390,000 (Assets = Equity + Liabilities)

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

Given 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 (.02% x 2600 = 52)

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?

$5200. (purchase price - salvage value / useful life) $65,000-(.20% x 65,000)/10 = $5200.

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

$60,000

Non-profits have to have CPA audited financial statements

true

Near-term, short-term, or current in accounting means ____ or less

12 months

Medicare was implement in which year?

1966

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

2 methods

Income Statement

A financial statement showing the revenue and expenses for a fiscal period or period of time.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Fiscal Year

A fiscal period consisting of 12 consecutive months.

A cooperative grouping of healthcare providers are known as:

Accountable Care Organizations

retained earnings

An amount earned by a corporation and not yet distributed to stockholders.

Asset Classification

An asset prioritization method that identifies the appropriate value and protection levels by grouping similar assets and comparing the valuation of different classifications.

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

Charity, Donations, and contractual allowance

Monopoly

Complete control of a product or business by one person or group

Consideration should be given to risks the organization faces.

Conservatism

Use of the same accounting method from period to period

Consistency

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

Charges are the same as revenues in accounting.

False

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

Full Disclosure

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

Going Concern

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

Intangible assets

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

Investing, Financing, Operating

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 or FIFO

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

Matching

Unrestricted Net Assets

Net Assets that have not been externally restricted by donors or grantors, such as the excess of revenues to expenses from operations

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

Net Patient Service Revenue

Based on evidence that reasonable individuals would agree upon

Objective Evidence

The Sarbanes-Oxley Act:

Requires disclosure of conflicts of interest, provides protection for whistleblowers, and requires periodic rotation of auditors.

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

Statement of Cash Flows

GAAP (Generally Accepted Accounting Principles)

The standards and rules that accountants follow while recording and reporting financial activities.

public goods

a commodity or service that is provided without profit to all members of a society

Non-profits need to disclose how liquid their organization is

true

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

A system of checks and balances make it easy to defraud and embezzle from an organization

false

An auditor reviews all documents to determine accuracy.

false

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

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

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

false

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

false

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

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 2

Obligations of the organization to outside creditors.

liabilities

Liability Classification

liabilities are generally divided into current and long-term categories

________________________ 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

long-term liabilities

obligations that a company expects to pay after one year

imperfect information

one party is more informed than the other in a transaction

Contributed Capital

owner contributions to a corporation

The reason for government regulation is

the market cannot allocate resources effectively

correct externalities

the need to correct information on financial statements if material in nature

All elements of a financial event are known as:

transaction

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 expense gets zeroed out after a financial reporting period for an organization.

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

Inventory is less liquid than receivables.

true

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

true