1) Annuities are insured by the Federal Insurance Deposit Corporation (FDIC).
2) An Appendix to the business plan (although optional) should always contain detail
that adequately supports selected contents in the main part of the business plan.
3) The FDIC insures deposits in banks and thrift institutions up to a certain limit.
Savings accounts, checking accounts and other eligible deposit accounts are combined
to reach the deposit insurance limit.
4) Depreciation results in an income tax savings because the depreciation can be taken
as an expense, and that expense reduces the organization’s taxable income.
5) Liabilities are also called “insider claims”.
6) Disbursements for services will trigger payment only when the expense is incurred.
7) When considering the use of an estimate, the first question should be: “Is it capable
of being estimated?”
8) Spending or price variance is calculated as the difference between actual quantity of
inputs used per unit of output multiplied by the actual output level and the budgeted
unit price.
9) The Debt Service Coverage Ratio (DSCR) is computed as total liabilities divided by
unrestricted net assets.
10) It is not uncommon for different plans to pay different contractual rates for the same
service.
11) In a responsibility center the manager is responsible for either the revenue (inflow)
side or the expense (outflow) side, but is rarely responsible for both.
12) Purchasing equipment means assuming ownership of and/or taking title to the item.
13) Pareto diagrams are often constructed before and after improvement efforts for
comparative purposes. When comparing before and after, if the improvement measures
are effective, either the order of the bars will change or the curve will be much flatter.
14) A chart of accounts format can contain:
A. 3 items
B. 5 items
C. 4 items
D. any of the above
15) The acronym EBIT
A. Is a broad measure in common use
B. Is widely used in by credit analysts
C. Is computed as earnings after interest and taxes (EBIT) divided by total assets
D. A & B
E. B & C
F. All of the above
16) Healthcare employees work in shifts. If a position requires someone to be present
around-the-clock (24 hours), then that position may be covered in:
A. Two shifts
B. Three shifts
C. Either of the above
D. Neither of the above
17) A Pareto diagram has:
A. Two vertical axes and one horizontal axis
B. Two horizontal axes and one vertical axis
C. Neither of the above
D. Dont know
18) Revenue forecasts can be:
A. Long-term
B. Short-term
C. Either of the above
D. Not applicable
19) Deflation is feared because it:
A. Typically results in a fall in prices
B. Limits or reduces the economic activity of the country
C. Reduces the spending power of dollars
D. Typically results in a rise in prices
E. A & B
F. A & D
G. B & C
H. C & D
20) The composition of an organization chart can be described as follows:
A. Each box on the chart represents a particular area of management responsibility
B. Each line between the boxes represents a line of authority
C. The overall composition of the chart shows the degree of centralization or
decentralization within the organization
D. A & B
E. A & C
F. B & C
G. All of the above
21) When is the last year to receive a Medicare EHR incentive payment?
A. 2014
B. 2015
C. 2016
D. 2021
E. None of the above
22) Do solvency and profitability ratios actually measure the same things, but in
different ways?
A. Always
B. Sometimes
C. Never
D. Dont Know
23) Inventory turnover:
A. Is a ratio
B. Shows how fast the inventory is sold
C. Is only calculated every five years
D. A & B
E. B & C
F. All of the above
G. None of the above
24) If volume rises or falls,
A. Variable costs will not change
B. Fixed costs will not change (within a wide range)
C. Variable costs will change
D. A & B
E. B & C
F. None of the above
25) Providers and suppliers directly impacted by ICD-10 transition costs include how
many of the following:
A. Hospitals
B. Physician offices
C. Health insurance carriers and third party administrators
D. A & B
E. A & C
F. B & C
G. All of the above
26) The Brown and Bishop physician group, a limited liability corporation (LLC), owes
$800,000 in debt and has $200,000 in partners equity. The LLCs capital structure, or
debt-equity relationship, is therefore:
A. 8-to-2
B. 2-to-8
C. 80-20
D. 20-80
E. None of the above
27) Using your computation of FIFO cost of goods sold from the previous question, and
further assuming Sales equal $500 and Operating Expenses equal $50, what is the
Gross Profit amount?
A. $350
B. $300
C. $250
D. None of the above
28) If operating budget items require additional capital equipment, then inputs to the
capital expenditure budget may have to be taken into consideration. These inputs would
typically include the following:
A. Capacity
B. Staffing Plan
C. Operating Revenue Forecast
D. A & B
E. A & C
F. B & C
G. All of the above
29) If budgeted costs are computed as standard hours for actual production and as
actual hours for actual production, is the resulting variance analysis a:
A. Two-variance analysis
B. Three-variance analysis
C. Five-variance analysis
D. All of the above
30) Regarding the maximum overall dollars that an eligible professional could have
received as EHR incentive payments, which of the following statements are correct?
The eligible professional could have received:
A. $44,000 under the Medicaid program
B. $63,750 under the Medicare program
C. $44,000 under the Medicare program
D. $63,750 under the Medicaid program
E. A & B
F. C & D
G. None of the above
31) Rationing available capital funds is often necessary. When evaluating capital
expenditure budget proposals the following factors may commonly be considered:
A. necessity for the request
B. cost of capital to the organization
C. return that could be realized on alternative investments
D. all of the above
E. A and B only
32) A report example has been provided within the Cost Classifications chapter that
illustrates a rehab cost centers allocation of indirect costs. The indirect cost computer
services was allocated to three types of therapy according to the number of computers
in service for each therapy type. Assume the number of computers has been changed to
20 . If the indirect cost per computer remains at $5,000, what is now the total computer
services indirect cost?
A. $100,000
B. $75,000
C. $200,000
D. None of the above
33) When healthcare finance is considered a method of getting money in and out of the
business, the successful manager is able to achieve the most beneficial outcome by
adjusting the inflow and outflow through what actions?
A. Organizing
B. Controlling
C. Decision making
D. Planning
E. A & B
F. B & C
G. C & D
H. All of the above
34) Sample Hospitals Benchmark Data Report appears in the Metropolis Health
Systems appendix whose title begins Comparative Analysis Using Financial Ratios and
Benchmarking. The benchmark data report contains various ratios, one of which is the
Return on Total Assets. Accordingly, Sample Hospitals Return on Total Assets for Year
1 amounted to minus 2.37%, while the first quarter of its Year 2 amounted to minus
3.58%. Is the result for the first quarter of Year 2 better or worse than the result reported
for Year 1?
A. Better
B. Worse
C. The same (neutral)
D. Dont know
35) Convenience in the computation method is the advantage of which method of
analyzing mixed costs?
A. The scatter graph method
B. The high-low method
C. Either of the above
D. Neither of the above
36) Mountain View Nursing Facility uses a chart of accounts format that is made up of
three sets of digits. The first set of digits represents the financial statement element, the
second is for a primary subclassification and the third is for a secondary
subclassification. To which of these three sets of digits would Petty cash for the front
office belong? The:
A. Financial statement element
B. Primary subclassification
C. Secondary subclassification
D. None of the above
37) Projections are views into the future.
A. Correct
B. Not correct
C. Not applicable
38) To determine the relevant range of volume or activity, it is necessary to:
A. Define the relevant range
B. Analyze expected patterns of cost
C. Separate the costs into fixed or variable
D. Define a single level of activity
E. A, B & C
F. B, C & D
G. All of the above
39) Debentures are bonds that are typically backed by:
A. Real property (real estate)
B. Cash equivalents
C. Revenues earned by the issuing company
D. Any of the above
E. None of the above
40) A Pareto diagram:
A. Displays the important causes of variation
B. Uses data collected about such causes of variation
C. Typically reinforces the idea that a small number of cases cause the most problems
D. All of the above
41) Grouping revenue by care settings for planning and control recognizes:
A. Different sites at which services are delivered
B. Activities that are grouped by responsibility center
C. Similar services and groups them into service lines
D. The most basic grouping of inpatient versus ambulatory services
E. A & B
F. B & C
G. A & D
42) In the burden approach to computing full-time equivalents, desired net hours are:
A. Inflated
B. Deflated
C. Computerized
43) In the case of healthcare, revenue is typically earned by:
A. Rendering services to the community
B. Rendering services to patients
C. Professionals such as physicians
D. Organizations such as hospitals
44) To estimate implies a judgment that takes the place of:
A. Counting
B. Testing out
C. Actual measuring
D. All of the above
E. None of the above
45) A small company with common stock that is not traded is known as a:
A. Privately-held company
B. Public company
C. Either of the above
D. Neither of the above
46) DRGs, or diagnosis-related groups are:
A. Part of the retrospective payment reimbursement methodology
B. Part of the prospective payment reimbursement methodology
C. Neither of the above
47) The information flowing from these inputs to the capital expenditure budget would
generally result in:
A. An estimate of the capital dollars required
B. Placement into the capital expenditure plan if dollar amount was larger enough
C. Placement into the capital expenditure plan regardless of the dollar amount
D. A revision of the organizations strategic plan
E. A & B
F. A & C
G. A & D
48) The figures on the present value table represent:
A. The value of $100.00
B. The value of $10.00
C. The value of $1.00
49) The VA Planning Cycles Process Flow example also provides VA definitions for
components within the cycle. Which of the following are contained in the VAs
definition of strategic goals?
A. A goal is a statement of aim or purpose included in a strategic plan
B. Most strategic goals are outcomes
C. Most strategic goals are short term in nature
D. A & B
E. A & C
F. B & C
G. All of the above
50) Regarding the maximum EHR incentive payment that an eligible professional can
receive for his or her first year in the Medicaid program, which of the following
statements is correct?
A. Medicaid first year 2016 would receive more dollars than Medicaid first year 2014
B. Medicaid first year 2014 would receive more dollars than Medicaid first year 2012
C. Medicaid first year 2014 would receive fewer dollars than Medicaid first year 2012
D. None of the above
51) Program payment adjustments:
A. increase the providers payment
B. decrease the providers payment
C. do not affect the actual payment amount
52) Which of the following are reasons for capital asset spending on new space and/or
equipment?
A. To create a new Nursing Facility
B. To expand capacity in the Laboratory Department
C. To create administrative space for a new Home Care program
D. All of the above
53) If the contribution margin is expressed as a percentage of net revenues, it is often
called the:
A. cost-volume-profit (CVP) ratio
B. profit-volume (PV) ratio
C. internal rate of return (IRR)
D. breakeven point
54) A “qualified electronic health record” is an electronic record of health-related
information on an individual that includes patient demographic and __________ health
information, such as medical history and problem lists.
55) Building an operating budget includes steps that involve both __________ and
actual construction of the budget.
56) In analyzing mixed costs by the high-low method, to compute the amount of
variable cost the difference in cost between high and low levels is obtained and is
__________ by the amount of change in the activity or volume.
57) Another source of capital is selling an additional interest in the organization. This
method typically involves a for-profit corporation selling additional shares of common
__________ to raise funds.
58) Susans sole duties involve managing and controlling cost in the Great Plains
Medical Center. Is Sue managing a responsibility center?
A, Yes
B, No
C. Not applicable
59) For purposes of annualizing positions, the definition of full time equivalent (FTE) is
as follows: the equivalent of one full-time employee __________ one year, including
both productive and nonproductive time.
60) The marketing segment of the business plan should describe the __________
market as well as that portion of the market your service or equipment should attract.
61) Amortization expense is a noncash expense that is assigned to __________
reporting periods.