1) In healthcare organizations, it is not very common to find departments as cost
centers.
2) Capital expenditure budgets can cover a five- to ten-year period because they may
take a futuristic view.
3) The capital expenditure budget may sometimes be identified by another name, such
as “capital spending plan”.
4) Classification of a note payable liability depends on the length of time that payment
is promised.
5) Managers who are affiliated with the information system hierarchy in the
organization typically operate from a:
A. Financial view
B. Process view
C. Clinical view
D. Any of the above
E. None of the above
6) If your pharmacy department used the First-In First-Out (FIFO) inventory method at
the beginning of your fiscal year, should the Chief Financial Officer use the Last-In
First-Out (LIFO) inventory method at the end of the year?
A. yes
B. no
C. not applicable
7) Ms. Brown, the CFO of Southern General Hospital, argues that benchmarking can
measure both services and activities of an ongoing project. Mr. OConnell, a prominent
hospital board member, disagrees. He argues that the hospital provides services and
thus only services should be considered in a benchmarking project. From a conceptual
viewpoint, who is correct?
A. Mr. OConnell, the board member
B. Ms. Brown, the CFO
C. Neither of the above
8) If the subject of the plan is a new service, patient information about who will use it
should include:
A. New patients only
B. Established patients only
C. Both new and established patients
D. None of the above
9) When matching revenue and expense, the term cost of sales is the common usage for:
A. Manufacturing firms
B. Physician groups
C. Outpatient clinics
D. Nursing facilities
10) The calculation of number of full time equivalents (FTEs) by the schedule position
method is used in:
A. planning
B. controlling
C. decision-making
D. all of the above
E. none of the above
11) How many of the following statements about situational analysis are correct?
Situational analysis:
A. Reviews the organizations internal operations
B. Explores the organizations external environment
C. Analyzes the organizations situation
D. A & B
E. A & C
F. C & D
G. All of the above
12) The physical location of the proposed equipment is information located in the plans:
A. Organization segment
B. Financial segment
C. Marketing segment
D. Either A or B
E. Any of the above
13) The South Fork Nursing Facility has received a grant to provide additional social
services for its residents. The grant requires separate accounting for these restricted
funds. Two extra staff have been hired using grant dollars. The administrator argues that
the staff salaries should be included in the South Fork operating budget so the full time
equivalent counts will be correct. What is correct operating budget procedure this case?
A. Grant expenditures such as these staff salaries should not be included in South Forks
budget because the grant money is restricted and requires separate accounting
B. It is all right to include all the grant operations in the South Fork budget because the
South Fork budget is an operating budget
C. As a compromise, include these two staff salaries in the budget, but not any other
grant expenditures
D. Any of the above
14) Volume variance represents the portion of overall variance caused by a difference
between:
A. the expected workload and the actual workload
B. the budgeted and the actual quantity of input needed per unit of output
C. actual and expected price of an input
15) Alpine County is planning to issue thirty-year bonds for a new capital project. The
bonds will be backed by the full taxing authority of the county, and by its full faith and
credit. These bonds are therefore:
A. General obligation bonds
B. Revenue bonds
C. Neither of the above
16) If international accounting standards were to be imposed on financial reporting for
certain U.S. companies, the benefits could include:
A. Global comparability
B. Accounting standard consistency
C. Funding of the adoption process
D. A & B
E. A & C
F. B & C
G. All of the above
17) When operating expenses for an organization are (a) reduced to a rate per day and
(b) compared with the amount in accounts payable, this computation:
A. Results in a figure known as days in accounts payable
B. Represents one measurement of operations within the organization
C. Both of the above
D. Neither of the above
18) The Days Cash on Hand ratio indicates cash on hand in relation to the amount of:
A. Daily operating expense
B. Monthly operating expense
C. Yearly operating expense
D. None of the above
19) The type of comparative analysis described in the previous question is also
sometimes called:
A. Vertical analysis
B. Horizontal analysis
C. Either of the above
D. Neither of the above
20) Operating budgets typically:
A. Contain expenses necessary to operate the facility
B. Reflect revenues from all sources
C. Have a futuristic view
D. All of the above
E. None of the above
21) Other types of capital expenditure proposals may also sometimes be paired as
either/or choices. Which of the following proposal types could also be easily presented
as a pair for such either/or choices?
A. Acquiring capital assets for future use
B. Funding expansion of existing programs
C. Funding new programs
D. A & B
E. A & C
F. B & C
22) At XYZ corporation, if retained earnings are $10,000 and liabilities are $25,000,
what is the total asset amount?
A. $35,000
B. $50,000
C. An unknown figure
D. None of the above
23) The schedule position method:
A. Computes the number of employees required to fill a position
B. Is another way to calculate the number of FTEs
C. Is used to control schedules
D. All of the above
E. None of the above
24) Comparing current expenses to the current budget of a department, division, unit or
program is typically the most common use of comparative data.
A. Correct
B. Not correct
C Not applicable
25) The Hillwood Health System owns six hospitals, the largest of which is Greentree
Medical Center. Each of the six hospitals has its own capital expenditure budget and
operating budget, and there is also a comprehensive Health System financial budget.
Responsibility for the Health Systems comprehensive financial budget rests with which
of the following employees?
A. The Greentree Medical Centers CFO
B. The Health Systems Controller
C. The Health Systems Vice President of Finance
D. Any of the above
26) When evaluating the use of resources, it is important to choose a method that:
A. Can be readily calculated
B. Is understood by the managers who will be using it
C. Is not too cumbersome
D. All of the above
27) The process involved for capital expenditure funding requests varies according to
the organization. The process may be influenced by:
A. size
B. the corporate culture
C. politics
D. all of the above
E. A and B only
28) A report example provided within the Cost Classifications chapter illustrates a rehab
cost centers allocation of indirect costs. The indirect cost administrative salaries was
allocated to three types of therapy according to the proportion of direct costs for each
therapy type. Assume the total administrative salaries to be allocated amounts to
$100,000. Further assume the proportion of direct costs is as follows:
PT = 60%; OT=30%; ST=10%. What is now the OT administrative salaries indirect
cost allocation?
A. $60,000
B. $30,000
C. $13,000
D. None of the above
29) The proper figure to use for forecasted revenue is:
A. Gross charges
B. Allowed charges
C. Either of the above
D. Neither of the above
30) Within a proposed capital expenditure, the answer to what is the cost of capital:
A. Is generally provided in the form of a computation
B. The amount of the answer depends on the method used to illustrate the cost
C. The amount of the answer does not depend upon any particular method used to
illustrate the cost
D. A & B
E. Any of the above
31) Of the four segments that make a healthcare financial system work, which one
reports about the effect occurring from an event?
A. The original records
B. The information system
C. The accounting system
D. The reporting system
E. Any of the above
32) Any unit for which a separate cost measurement is desired may be known as a:
A. Cost object
B. Cost objective
C. Either of the above
33) A new MRI machine has been approved and placed in the Capital Expenditures
Budget. When this expenditure occurs, the MRI machine will be :
A. Recognized as an additional capital cost
B. Placed on the balance sheet
C. Recognized as net worth
D. A & B
E. A & C
F. B & C
34) When a typical healthcare organization adopts the EHR Incentive Program, how
many of the following statements will apply?
A. Appropriate incentive payments will be received upon qualification
B. Cash expenditures will have to be made in order to qualify
C. A time lag will inevitably occur between cash coming in and cash going out
D. Incentive payments are not expected to cover the full cost of EHR adoption
E. A & B
F. A, B & C
G. All of the above
H. None of the above
35) An organizations economic resources include:
A. Accounts receivable
B. Notes receivable
C. Notes payable
D. A & B
E. A & C
F. B & C
G. None of the above
36) The Liabilities to Fund Balance computation is typically presented as a:
A. Percentage
B. Ratio
C. Either of the above
D. Neither of the above
37) It is important to properly use the language of the world of finance. This is
sometimes difficult to do when words sound and look much the same, but have very
different meanings. Accordingly, using what you know and what you have observed
about healthcare finance: which of the following usages are correct?
A. “Capitol” represents the financial structure of the organization
B. Capital represents the financial structure of the organization
C. Capitol represents a building housing a legislative assembly (such as the U.S.
Congress)
D. Capital represents a building housing a legislative assembly (such as the U.S.
Congress)
E. A & D
F. B & C
G. None of the above
38) Is the percentage answer from the preceding question considered to be the:
A. CVP Ratio
B. PV Ratio
C. Neither of the above
39) If you are typically making at least one best case and one worst case computation,
then we can generally assume that you are using the:
A. Unadjusted rate of return method
B. Payback period method
C. Either of the above
D. Neither of the above
40) Certain barriers exist as to the adoption of international accounting standards for
financial reporting by certain U.S. companies. These barriers include:
A. Funding of the effort
B. Maintenance of the standards
C. Global comparability
D. Governance issues
E. A & B
F. A & C
G. A, B & C
H. A, B & D
41) How many of the following statements about the components of a strategic plan are
correct?
A. Any goal should tie directly into an element of the mission statement
B. Any action plan must support a subcomponent of the overall objective
C. Any objective should support and tie directly into a particular strategic goal
D. There are typically several goals associated with each objective
E. A & D only
F. A, B & C
G. A, B & D
H. All of the above
42) When seeking verification before using comparative data, which of the following
questions should be asked:
A. can the data be verified?
B. is it reasonable?
C. if an objective qualified person reviewed the data, would he or she arrive at the same
conclusion and/or results?
D. all of the above
E. A and B only
43) When working on a day-to-day basis, the manager is most likely:
A. Keeping the results of organizing running efficiently
B. Directing
C. Organizing
D. A & B
E. A & C
F. B & C
G. All of the above
44) Assume the following: Cost of goods sold = $130,000; Purchases = $170,000;
Beginning inventory = $40,000; Ending inventory = $80,000; Current assets =
$240,000.
Calculate the average inventory, as used when calculating inventory turnover. Correct
answer is:
A $60,000
B $120,000
C $210,000
D None of the above
45) The master staffing plan for a nursing unit using 12-hour shifts should cover:
Three shifts within 24 hours
Two shifts within 24 hours
Flexible-schedule shifts
None of the above
46) A mission statement explains the _________ of the organization, while values
express the organizations __________.
47) When forecasting results, the ultimate accuracy of a forecast rests on the
__________ of its assumptions.
48) Assume a fixed asset cost of $10,000 and a useful life of five years. In commencing
to compute double-declining depreciation, the double-declining factor is computed as
follows: first the $10,000 cost of the fixed asset is divided by the assets useful life of
five years to equal 20%, or a factor of .20 .
Next multiply the factor of .20 by what amount to arrive at the proper double-declining
factor?
A Multiply by ten percent
B Multiply by one-and-one-half
C Multiply by two
D None of the above