FC 772 Midterm 2

subject Type Homework Help
subject Pages 9
subject Words 2346
subject Authors Judith J. Baker, R.W. Baker

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1) The net book value of a fixed asset is computed as follows: subtract the Reserve for
Depreciation from the original cost of the fixed asset.
2) Within the planning cycle and process flow, broad goals become narrower objectives,
and narrower objectives become detailed vision statements,
3) Pareto analysis is an analytical measurement tool based on the Pareto principle. The
Pareto principle is often called the "60/40 Rule".
4) A variance is the difference between standard and actual prices and quantities.
5) While the current ratio is a measure of short-term debt-paying ability, the quick ratio
is an even more severe test of such ability.
6) The balancing of the elements in the balance sheet represents: "beginning balance
plus operating income equals ending balance".
7) "Book depreciation" is the depreciation expense recorded in the financial accounting
records and reflected on the financial statements.
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8) The four major reports are the balance sheet; the statement of revenue and expense;
the statement of changes in fund balance/net worth; and the cash flow statement.
9) The Compound Interest Table can be used to determine a cumulative inflation factor.
10) The statement of revenue is stated at a particular point in time.
11) At the time of this writing the current version of electronic transmission standards is
Version 5010.
12) The Horizon Healthcare Foundation was formed to solicit donations that support
certain initiatives of the Horizon Hospital. The Foundation is a separate legal entity that
meets all the relevant IRS criteria for foundations. David, the hospital controller, has
prepared an operating budget for the coming year that includes all revenues and
expenses of the foundation within the hospitals budget. Peggy, the hospital CFO, tells
David to remove the Foundation expenses and revenues. What is correct operating
budget procedure in this case?
A. Leave the foundation revenues and expenses in the hospitals operating budget
B. Remove the foundation revenues and expenses because it is a separate legal entity
C. Remove the foundation revenues and expenses because Peggy doesnt get along with
the foundations director
D. None of the above
13) Two of the most common types of forecasts found in most healthcare organizations
include:
A. Revenue forecasts and cash flow forecasts
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B. Staffing forecasts and revenue forecasts
C. Neither of the above
14) The total annual hours for a standard work year at 40 hours per week will differ
from the total annual hours for a standard work year at 37.5 hours per week. The
standard work year at 40 hours per week will amount to:
A. 2,080
B. 1,950
C. 480
D. 450
E. None of the above
15) According to the chart that illustrates Maximum EHR EP Incentive Payments,
payments to eligible professionals under the Medicaid EHR incentive program will
cover a period of how many years?
A. Two years
B. Three years
C. Four years
D. Five years
E. None of the above
16) Profitability ratios include:
A. operating margin
B. return on total assets
C. both A and B
D. neither A nor B
17) The goal of the burden approach to computing full-time equivalents is to arrive at:
A. The supervisors weekly schedule
B. The desired number of net hours on duty
C. The gross number of required paid hours
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D. None of the above
18) If the full established rate for a procedure is $1,000 and the agreed-upon contractual
rate to be paid is $800, then the $200 difference is recorded on the books of the
organization as:
A. A contractual allowance
B. A discount
C. Neither of the above
19) Technically speaking, the Health Information Technology for Economic and
Clinical Health Act (HITECH) is actually part of:
A. The American Recovery and Reinvestment Act of 2009 (ARRA)
B. The Medicare Improvements for Patients and Providers Act (MIPPA)
C. An Office of the National Coordinator for Health Information Technologys initiative
D. None of the above
20) Comparison on the basis of percentages can be made:
A. On your own organization data
B. Between your own organization and another similar organization
C. Among various organizations
D. All of the above
21) Which of the following is correct? The statement of revenue and expense is:
A. Stated at a particular point in time
B. Stated over a period of time
C. Neither of the above
22) Non-productive time may include:
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A. sick days
B. holidays
C. personal leave days
D. all of the above
E. none of the above
23) Proprietary entity subgroups include:
A. Voluntary entities
B. Government entities
C. Entities that pay no income tax
D. A & B
E. A & C
F. B & C
G. None of the above
24) As part of the history of financial management, who developed the concept of
specialization for efficiency?
A. Plato
B. Socrates
C. The Egyptians
D. None of the above
25) The change from ICD-9 to ICD-10 represents a significant technological problem.
Chapter 26 lists twenty-five examples of various systems and applications that are
affected by this change, including:
A. specifications that will need revising
B. vendor software and systems that will need revisions
C. systems used to model or calculate that are impacted
D. all of the above
E. A and B only
26) An individual inventory item is recognized as "cost of goods sold" when it:
A. moves out of inventory
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B. is purchased
C. is recorded as entering the inventory
D. none of the above
27) Which of these statements is correct?
A. Flexible budgets can be used to review prior performance of a department
B. Static budgets may be used to plan a goal for the budget period
C. Both of the above
D. Neither of the above
28) Liquidity ratios measure:
A. Long-term sufficiency
B. Short-term sufficiency
C. Both of the above
D. Neither of the above
29) If the euro is trading at 1.2500 in U.S. dollars (this exchange rate is for illustration
only), and you were spending your U.S. dollar in Europe in part of the euro area, then to
buy products priced in euros:
A. It would take a third again as much (1.33) in U.S. dollars
B. It would take one-quarter again as much (1.25) in U.S. dollars
C. It would take three-quarters again as much in U.S. dollars
D. None of the above
30) How many of the following are Cash Flow Statement assumptions?
A. Number of years in the future to forecast
B. Capital asset purchase or lease information
C. Special equipment requirements to offer the service
D. A & B
E. A & C
F. B & C
G. All of the above
H. None of the above
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31) Liabilities may be called:
A. Insider claims
B. Outsider claims
C. Either of the above
D. Neither of the above
32) Regarding the relationship between meaningful use measures and objectives, what
following statements are correct?
A. Each core measure is tied to its core objective
B. Each menu measure is tied to its menu objective
C. Each menu measure may be tied to either a core or a menu objective
D. A & B
E. A & C
F. B & C
G. None of the above
33) Standardized measures may include:
A. Work load measures
B. Sets of standards used by managed care plans
C. Hospital per-bed measures
D. All of the above
E. None of the above
34) In regard to system implementation planning recommendations, the phase called
Strategic Implementation and Organizing should include the following:
A. Acquire resources to implement
B. Evaluate financial impact
C. Develop objectives
D. A & B
E. A & C
F. B & C
G. All of the above
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35) Expenses represent:
A. Expenditures that flow into the organization
B. Expenditures that flow out of the organization
C. Neither of the above
36) Predetermined per-person payment received:
A. Is a payment method after the service is delivered
B. Generally consists of an amount received at the agreed-upon rate
C. Is typically a per-person count at a particular point in time
D. A & B
E. A & C
F. B & C
G. None of the above
37) Assume the following: (1) Desired target operating income $20,000; unit price for
sales $500; variable costs per unit $300; total fixed cost $10,000. (2) We have applied
the formula to calculate the contribution margin method of determining target operating
income, and have arrived at a numerator amount of $30,000 (20,000 plus 10,000) and a
denominator amount of $200 (500 minus 300). (3) These figures yield an answer of 150
units (30,000 divided by 200). What is the required revenue to achieve the target
operating income of $20,000?
A. $30,000
B. $45,000
C. $75,000
D. $150,000
E. None of the above
38) In most organizations, the Human Resources Department is considered to be a:
A. Responsibility Center
B. Support Center
C. Either of the above
D. Neither of the above
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39) Referring once again to the infusion center variance analysis illustrated example,
note that the flexible budget variance is $11,200 (unfavorable), the sales volume
variance is $12,000 (favorable), the static planning budget is $20,000, and the actual
amounts at actual prices is $20,800. With what you have learned about variance
analysis, what is the proof total amount for this analysis?
A. $8,800
B. $8,000
C. $800
D. None of the above
40) The business of hospitals and healthcare systems is typically:
A. The manufacture of products
B. The delivery of manufactured products
C. The delivery of services
D. Research and development
41) Which of the cash flow reporting methods does not take profitability into account?
A. Payback method
B. Accounting rate of return
C. Net present value
D. Internal rate of return
E. None of the above
42) Short term securities will mature in:
A. One year or less
B. One year or more
C. Either of the above
D. Neither of the above
43) Standards underlying generally accepted accounting principles within the U.S. are
presently produced by a board known as:
A. SEC
B. IASB
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C. FASB
D. None of the above
44) Pre-determined per-person payment indicates:
A. payment after the service is delivered
B. payment before the service is delivered
C. either A or B
45) Capital expenditures involve the acquisition of assets that are long lasting, such as:
A. Land and buildings
B. Equipment with an appropriate number of years of useful life
C. Supplies
D. Operating expenses for the next year
E. A & B
F. A, B & C
G. A, B & D
46) The method described in the preceding two questions has the advantage of
accommodating the organizations choice of:
A. Inventory method
B. Depreciation method
C. Neither of the above
47) When the Last-In-First-Out (LIFO) inventory method is compared to the
First-In-First-Out (FIFO) method, the LIFO ending inventory figure will be:
A. higher
B. lower
C. neither of the above
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48) Liquidity ratios reflect the ability of the organization to meet its' __________
obligations.
Ans: Current (optional
49) The use of one or more supporting reports to reveal details (such as the example
showing allocation of indirect cost) is considered a __________ report, because it is
supporting the preceding main report.
50) Revenue flows into the organization (inflow) and is sometimes referred to as the
revenue __________.
51) Essential ingredients of staffing plans include pay rates and __________.
52) Assume the following: Greenville Hospitals full established rate for a certain
procedure is $200, but the Eastern Health Plans managed care contract pays the hospital
only $180 for the procedure.
What is the correct recorded revenue figure?
A $180
B $200
C $190
D None of the above
53) The accounting equation that reflects a relationship among three parts can be stated
as follows: "Liabilities plus Net Worth equals __________".
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54) The effect of inflation is computed through the use of an __________.
55) If a piece of equipment costs $100,000 and has a five-year useful life and no
salvage value, what is the annual depreciation expense using the straight-line
depreciation method?
56) A contract-to-purchase transaction is also called a __________ lease.
57) The use of industry standards for comparative purposes is of particular use for
decision making because it positions the particular organization within a large grouping
of facilities that provide a similar __________ of __________.

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