Ch. 16 Quiz

Which of the following would usually be considered as net assets with donor restrictions in a nongovernmental not-for-profit hospital? A) A permanent endowment received from the city's leading citizen. B) Donated services by senior citizens. C) Funds designated by the board of directors for future equipment purchases. D) Sales from the hospital gift shop.

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

An annual contributor to a nongovernmental not-for-profit hospital made an unrestricted pledge in October 2019 that will be paid in March 2020. Assuming the hospital's fiscal year-end is December 31, 2019, the pledge should be credited to: A) Contributions—With Donor Restrictions in 2019. B) Contributions—Without Donor Restrictions in equal amounts in 2019 and 2020. C) Contributions—Without Donor Restrictions in 2019. D) Contributions—With Donor Restrictions in 2020.

A) Contributions—With Donor Restrictions in 2019.

How would the cash acquisition of equipment be reported on a health care entity's statement of cash flows? A) Investing activity applying FASB standards. B) Financing activity applying FASB standards. C) Investing activity applying GASB standards. D) Operating activity applying GASB standards.

A) Investing activity applying FASB standards.

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) Other Revenue. B) Nonoperating Gains. C) Deferred Revenues. D) Net Patient Service Revenue.

A) Other Revenue.

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) $200,000. C) $195,000. D) $300,000.

C) $195,000.

Which of the following statements is true about diagnosis-related groups (DRGs)? A) 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. B) DRGs are the basis for a cost accounting method that groups costs together by departments performing the services. C) 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. D) The federal Medicare system of retroactive payment for services depends on DRGs.

C) 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.

Which of the following would be considered service revenue of a health care entity? A) Revenue from the hospital cafeteria. B) Fee revenue received for providing medical transcripts. C) Capitation fees received from a health maintenance organization. D) Revenue received for the rental of an assisted living facility's conference room to a local not-for-profit.

C) Capitation fees received from a health maintenance organization.

Which of the following would be considered an asset limited as to use? A) Cash donated for an endowment. B) Cash contributions that are to be used for the building fund. C) Cash designated for equipment acquisitions by the board of directors. D) Cash from a federal research grant, which is to be used for water quality research.

C) Cash designated for equipment acquisitions by the board of directors.

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) Volunteers in the gift shop who work a few hours a day serving customers. B) Community members who plant flowers on the grounds once a year in the spring. 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.

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

Which of the following statements concerning the Patient Protection and Affordable Care 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) The Act had 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. D) The Act has impacted delivery of services, as well as the cost and compensation of services.

D) The Act has impacted delivery of services, as well as the cost and compensation of services.