1) On the present value table in this textbook, the interest rate is found on the horizontal
columns and the number of years in the period is found on the vertical columns.
2) Regarding cash flow reporting methods, the “net present value” method is a
discounted cash flow method, while the “payback” method is based on profitability.
3) If an expense is recorded in the Accounts Payable account, it is then cleared from
Accounts Payable when payment is made.
4) “Insider claims” are called owner’s equity or net worth because these are claims held
by owners of the business.
5) An inflow of revenues increases equity, whereas the outflow of expenses decreases
equity.
6) To calculate a ratio, divide the bottom number (denominator) into the top number
(numerator).
7) “Cumulative cash flow” means the accumulated effect of cash inflows and cash
outflows must be added and/or subtracted to show the overall net accumulated result.
8) A not-for-profit organization typically is not affected by tax savings because it is
exempt from paying income taxes on its operations. However, this fact does not affect
any line items in an owning-versus-leasing comparative analysis of net cash flow
effects performed between a for-profit and a not-for-profit organization.
9) One way to think of product cost is as necessary to the department, unit, etc to
deliver the service, while period costs are necessary to support the existence of the
organization itself.
10) The excess of revenue over expenses flows back into equity or fund balance
through the statement of fund balance/net worth.
11) Of the four segments that make a financial management system work,
the reporting system provides evidence that some event has occurred.
12) When analyzing lease-versus-purchase decisions, it is usually assumed that the
money to purchase equipment will be borrowed.
13) An example of a calculation for number of employees required to fill a scheduled
position is as follows: a scheduled position requiring seven days a week to cover equals
a factor of 4 .
14) When creating a report to communicate financial information, the manager must
typically use a standard format that:
A. Is used by a healthcare trade organization
B. Is accepted in the accounting profession
C. Uses terminology that is accepted in your area of the healthcare industry
D. A & B
E. A & C
F. B & C
G. All of the above
15) Hospital incentives under the HITECH Act are based upon inpatient hospital
services, and the hospital must be a “meaningful electronic health records (EHR) user”
to be eligible for payment. In general, an eligible hospital can receive a base amount
payment plus discharge-related payments that span a four-year period. The hospital
base payment amount (at the time of this writing) is:
A. $1,000,000
B. $2,000,000
C. $3,000,000
D. none of the above
16) When management considers a real estate purchase that involves a mortgage,
important considerations must be taken into account. Which items in the list below
should be considered before committing to a real estate mortgage?
A. What is the potential risk factor?
B. What is the liquidity prospect?
C. What is the income tax impact, if any?
D. A & B
E. All of the above
17) David Smith has recently become Vice President of Finance for the New Age
Clinics organization, located in the state of New York. New Age Clinics has recently
acquired three small chains of clinics and is struggling to consolidate their varying
processes into the organization. David suggests using a benchmarking method to
highlight what needs to be accomplished within the integration process. He further
suggests they examine the process of a particular clinic chain with a world-class
reputation. The chain is located far away from the New Age market area, and is thus a
non-competitor. Is examining the process of non-competitors with a world-class
reputation a recognized method of benchmarking?
A. Yes
B. No
C. Not applicable
18) Preferred stock:
A. Generally has a fixed-rate dividend payment
B. Is eligible to receive a certain portion of the net income of the company who issued
the stock
C. Both of the above
D. Neither of the above
19) The operating margin is computed as follows:
A. Total operating revenues divided by operating income (or loss)
B. Operating income (or loss) divided by total operating revenues
C. Either of the above
D. Neither of the above
20) Healthcare organizations who adopt and implement the EHR Incentive Program
will typically incur certain related costs. The major program adoption costs will
generally be related to:
A. Acquiring health information systems that provide certified EHR technology
B. Updating existing health information systems in order to provide certified EHR
technology
C. Converting existing health information systems to accept ICD-10 code sets
D. A & B
E. A & C
F. B & C
G. All of the above
21) Whether payment is received before or after service delivery:
A. Often influences the amount of liabilities recorded
B. Is one way that expenses are classified
C. Often influences the amount of revenue received
D. Is one way that revenue is classified
E. A & B
F. C & D
G. None of the above
.
22) An individual or organization that buys stock in a company becomes:
A. The companys creditor
B. The companys investor
C. Both of the above
D. Neither of the above
23) When comparing the high-low method of analyzing mixed costs to the scatter graph
method, the scatter graph finds the mixed cost’s average rate of variability:
A. more accurately
B. less accurately
C. about the same
24) What method answers the following question: If we invested $1,000 under a
particular set of assumptions, how long would it take to get our $1,000 back?:
A. The internal rate of return method
B. The payback period method
C. Either of the above
D. Neither of the above
25) Computing the tax savings from leasing expense is:
A. Always necessary
B. Sometimes necessary
C. Never necessary
D. Not applicable
26) The following calculation should be performed to obtain a Total Variance proof
total:
A. Budgeted Cost less Applied Cost
B. Actual Cost less Applied Cost
C. Actual Cost less Budgeted Cost
D. None of the above
27) Examples of cost centers may include the:
A. Medical records division
B. Billing and collection office
C. An individual security guards costs
D. A & B
E. A & C
F. B & C
G. All of the above
28) Closely held stock represents stock that is owned by a company that:
A. Is traded on the stock exchange
B. Is not traded on the stock exchange
C. Either of the above
D. Neither of the above
29) When converting dollars to percentages, the result allows:
A. A common basis of comparison
B. Comparative analysis
C. Trend analysis
D. A & B
E. A & C
F. B & C
G. None of the above
30) Variance analysis is primarily a matter of:
A. Margin analysis
B. Differential analysis
C. Input-output analysis
D. None of the above
31) Fully depreciated fixed assets (meaning all depreciable cost has been recognized)
may still remain on the books if they are still in use.
A. Correct
B. Not correct
C. Not applicable
32) When using the look-up table as described in the text, read down the appropriate
column and read across the appropriate line. The point where these meet on the table
contains the present value factor to be used in your calculations.
A. Correct
B. Not correct
C. Not applicable
33) The use of proper terms is an important part of the finance world. In that context,
when GAAP is involved, what is the proper spelling of the following term, or word?
A. Principal
B. Principle
C. Neither of the above
34) Outpatient providers and suppliers directly impacted by ICD-10 transition costs
include:
A. Outpatient care centers
B. Medical diagnostic and imaging services
C. Durable medical equipment manufacturers
D. A & B
E. A & C
F. B & C
G. All of the above
35) All types of business receivables are assets:
A. Correct
B. Not correct
C. Not applicable
36) A capital expenditure proposal for a new program:
A. Is sometimes allowed to disregard startup costs
B. Will be comparatively easier to prepare
C. Will typically be shorter than a proposal to replace equipment
D. All of the above
E. None of the above
37) It is possible that some expenses may be variable to one organization and fixed to
another because they are handled differently by the two organizations.
A. Correct
B. Not correct
C. Not applicable
38) The original cost, or historical cost, of buildings and equipment is reduced by:
A. Accumulated depreciation
B. Accumulated liabilities
C. Reserve for amortization
D. None of the above
39) The Compound Interest Table is constructed to show
A. Percentages horizontally and years vertically
B. Years vertically and percentages horizontally
C. Neither of the above
40) How many of the following are Income Statement assumptions?
A. What types of revenue
B. Cost of drugs, supplies and/or devices
C. How much labor will be required
D. A & B
E. A & C
F. B & C
G. All of the above
H. None of the above
41) The cost reports Beginning Trial Balance consists of:
A. Three columns
B. Two columns
C. Five columns
D. Seven columns
E. None of the above
42) At the Worth & Williams Clinic, if short-term liabilities are $10,000, long-term
liabilities are $70,000, owners equity is $30,000 and current assets are $20,000. What is
the total asset figure?
A. $100,000
B. $110,000
C. $130,000
D. None of the above
43) Robert, the controller for a community hospital, is responsible for commencing a
benchmarking project. The hospital is part of a 15-hospital system, so Robert decides he
can look inside his own organizations system in order to find best levels of performance
for measurement purposes. Is this approach acceptable for benchmarking purposes?
A. Yes
B. No
C. Not applicable
44) Healthcare industry segments that are directly affected by the adoption of updated
electronic transaction standards include:
A Hospitals and physicians
B. Commercial health plans
C. Clearinghouses and vendors
D. A & B
E. A & C
F. B & C
G. All of the above
45) Contractual allowances are the difference between the agreed-upon contractual rate
that will be paid and the full __________.
46) When verifying comparative data, you should retain your back-up data, because
they are the __________ that supports your conclusions about the verification.
47) Volume variance is also known as __________ variance.
48) The cost of an operating lease is considered to be an __________ expense.
49) Another term for responsibility center is __________.
50) Profitability ratios reflect the ability of the organization to operate with an
__________ of operating revenue over operating expense.
51) The interrelationship between depreciation expense and the reserve for depreciation
is as follows: when depreciation expense for the year is recorded in the income
statement, an equivalent amount is added to the cumulative amount that has been
accumulating within the reserve for depreciation on the __________.
52) The six major components of a strategic plan include the following: mission
statement, vision statement, organizational values, _________, ________, and
__________.