1) In cash basis accounting, revenue is recorded when it is earned and expenses are
recorded when they are incurred.
2) Regarding capacity level issues in forecasting, the ability to provide services is
automatically limited by the availability of both space and the proper required
equipment.
3) The three parts of the accounting equation must always balance among themselves,
because that is how they fit together.
4) Two-variance analysis compares volume variance to budgeted costs.
5) It is common to group expenses by either diagnoses or procedures for purposes of
planning and control.
6) The standard by which the Quick Ratio is measured is generally two to one.
7) The process of trend analysis compares figures over several time periods.
8) If a certain method of grouping revenue for planning and control is generally
accepted in other health care facilities, it is not strictly necessary for such a method to
be consistent with the current structure of the facility where it is in use.
9) The business plan’s financial analysis segment should contain a forecast of
operations.
10) The basic formula for a statement of revenue and expense is as follows: operating
revenue minus operating expense equals operating income.
11) The change from ICD-9 to ICD-10 includes ICD-10-CM diagnosis codes moving
from approximately 13,000 codes to approximately 68,000 available codes and ICD-10
procedure codes moving from approximately 3,000 codes to approximately 87,000
available codes.
12) A strategic objective further defines intended outcomes in order to achieve a goal.
13) Quartiles can effectively illustrate a variety of performance measures. Quartiles are
based on a qualitative method of computation.
14) The major purpose of present value analysis (computing the time value of money) is
to evaluate alternatives regarding the use of money.
15) Much of the strategic planning for the organization is performed by managers with
a financial view of the organization.
16) Internal rate of return (IRR) represents the rate of interest that discounts present net
inflows from a proposed investment down to the amount invested.
17) How many of the following statements are correct? If an EHR system offers
certified EHR technology, that means the certification:
A. Can help the provider meet meaningful use criteria
B. Offers the technological capability and data security required for such certification
C. Provides assurance the system can work with other systems to share information
D. A & B
E. A & C
F. B & C
G. All of the above
H. None of the above
18) Buildings and equipment are typically stated at a net figure called:
A. Book value
B. Long term value
C. Historical value
D. None of the above
19) Is a support center a responsibility center?
A. Yes
B. No
C. Not applicable
20) A payback period is the length of time required for the cash coming in from an
investment to equal the:
A. “best case” assumed income
B. amount of cash spent over the entire payback period
C. amount of cash originally spent when the investment was acquired
21) The overall present value net cost is determined by adding all the present value
answers to arrive at a net result (as shown in examples), including which of the
following [hint: negative numbers are shown in brackets]:
A. Both positive and negative numbers
B. Only positive numbers
C. Either of the above
D. Neither of the above
22) In regard to the federal infrastructure goal and its funding of initiatives, the
HITECH Act provides approximately how many dollars in incentives for hospitals and
physicians?
A. 17 million dollars
B. 71 million dollars
C. 17 billion dollars
D. None of the above
23) Healthcare organizations who participate in the EHR Incentive Program will have
to meet certain program requirements. To comply with one primary program
requirement, the organization must:
A. Adopt certified electronic health record technology
B. Be able to utilize health information technology
C. Be able to utilize Version 5010 standards conversion
D. A & B
E. A & C
F. B & C
G. All of the above
24) Nonoperating Gains (Losses) belongs on the:
A. Balance sheet
B. Statement of revenue and expenses
C. Neither of the above
25) The manager with a financial viewpoint generally:
A. Works with the system of the organization
B. Is responsible for the reporting function of the organization
C. May be responsible for service delivery within the organization
D. All of the above
26) According to the sample format provided in the text, a business plan should:
A. Always contain the Organizational, Marketing and Financial plans
B. Always contain the Organizational and Financial plans, but Marketing is optional
C. Always contain an Appendix
D. The Appendix is optional
E. A & C
F. A & D
G. B & C
H. B & D
27) To report using quartiles, results must first be divided into:
A. Eight groups
B. Three groups
C. Four groups
D. None of the above
28) Examples of indirect cost include the following (indicate all that apply):
A. The inpatient nursing department
B. The controllers office
C. The grounds maintenance department
D. The outpatient emergency department
E. A & B
F. B & C
G. A & D
29) At Horizon Hospital there are separate nursing departmental budgets for Inpatient
Nursing and for Outpatient Nursing. How many of the following expenses are likely to
be identified in these two nursing departmental budgets?
A. Nursing salaries
B. Nursing administration
C. Quality management
D. Data processing
E. A & B
F. C & D
G. All of the above
30) If the heading on a report reads For the year ended June 30, we can assume that the
report covers a:
A. Fiscal year
B. Full twelve-month period
C. Stub period
D. A & B
E. A & C
F. B & C
G. None of the above
31) The primary purpose of annual year-end reports is to report the organizations
operations for the period to:
A. Outsiders or third parties
B. The organizations managers
C. Both of the above
D. Either of the above
32) Convertible preferred stock is a type of preferred that:
A. Can be exchanged for common shares
B. Can never be exchanged for common shares
C. Either of the above
D. Neither of the above
33) In one particular method of computing the rate of return, the result represents the
maximum rate of interest that can be paid for capital over the entire span of the
investment without incurring a loss. This method is known as:
A. The internal rate of return method
B. The unadjusted rate of return method
C. The payback period method
34) In calculating the number of employees that are required to fill a scheduled
position, assume the following: one full-time employee works 40 hours per week (eight
hours per day times five days). Therefore one eight-hour shift per day times seven days
per week equals:
A. 56 hours on duty
B. 84 hours on duty
C. Neither of the above
35) Which is correct?
A. Forecast results directly affect assumptions
B. Assumptions directly affect forecast results
C. Either of the above
D. Neither of the above
36) The Centers for Medicare and Medicaid Services has developed a procedure
classification system termed the ICD-10-PCS. The ICD-10-PCS procedure
classification system has been developed for use in:
A. All types of healthcare treatment settings in the United States
B. Inpatient hospital settings only within the United States
C. All types of healthcare treatment settings in any of the international centers that are
collaborating with the World Health Organization regarding this project
D. A & B
E. A & C
F. B & C
G. None of the above
37) When operations exceed the break-even point, there will be:
A. An excess of expenses over revenues
B. An excess of revenues over expenses
C. Neither of the above; not applicable
38) The recognition of depreciation is one of the characteristics of accrual accounting.
A. Correct
B. Not correct
C. Not applicable
39) A financial lease that meets purchase criteria should be treated on the books of the
organization as:
A. an asset
B. a liability
C. a current operating expense
D. A and B
E. none of the above
40) In variance analysis the applicable standard:
A. Could be a standard quantity
B. Could be standard hours
C. Equates to what should have been used rather than what was actually used
D. A & B only
E. All of the above
41) Assume the following units of sales for a particular period: 900, 1,000, 975, 850,
875, 750. Which of these figures should be used when analyzing mixed costs by the
high-low method?
A. 1,000 and 850
B. 1,000 and 750
C. 975 and 875
42) Gross margin:
A. Is often expressed as a percentage
B. Equals revenue from sales less cost of goods sold
C. Can readily be compared to industry standards
D. All of the above
E. None of the above
43) The Metropolis Health Systems central administrative office employees work on a
40-hour five-day per week schedule. Eleanor and Frank share an administrative position
there. Each works 20 hours per week, for a total of 40 hours. Do their hours worked
equal a full-time equivalent position in the central administrative office?
A. Yes
B. No
C. Not applicable
44) The column charts data is presented:
A. In horizontal columns
B. In vertical bars
C. In a circular format
D. None of the above
45) Information about patients who will use the service is located in the plans:
A. Organization segment
B. Marketing segment
C. Financial segment
D. Any of the above
E. Not applicable
46) A Financial Benchmark Example within the text presents examples of quartile
results. For the line item Total margin, the Upper Quartile result is high (11.0%) and the
Low Quartile result is low (-6.0). Using your judgment and what you have learned to
date, is the Low Quartiles low result:
A. Better than the Upper Quartiles
B. Worse than the Upper Quartiles
C. Not applicable
D. Dont know
47) Generally accepted accounting principles (GAAP) require that unrestricted fund
balances be separated from restricted fund balances on the financial statements.
A. Correct
B. Not correct
C. Not applicable
48) The payback period concept is used extensively in evaluating whether to invest in:
A. certificates of deposit
B. additional inventory
C. plant and/or equipment
D. all of the above
E. none of the above
49) Expenses are the:
A. Costs of doing business
B. Costs that relate to earning revenue
C. Both of the above
D. Neither of the above
50) The traditional payment method in health care is:
A. Payment before service is delivered
B Payment after contracts are negotiated
C. Payment after service is delivered
D. None of the above
51) Lending agreements often have a provision that requires the Debt Service Coverage
Ratio (DSCR) to be maintained:
A. At or above a certain figure
B. Below a certain figure
C. Either of the above
D. Neither of the above
52) The factor from the present value table for ten years at ten percent is 0.3855. If you
want to find the present value of $8,000 under these assumptions (10 years and 10%),
then you must do the following:
A. Multiply $8,000 times 0.3855
B. Divide $8,000 times 0.3855
C. Find a different factor
D. None of the above
53) The competition and its impact is information located in the plans:
A. Organization segment
B. Marketing segment
C. Financial segment
D. Any of the above
E. Not applicable
54) The healthcare industry is a ________ industry.
55) Using the following assumptions, what amount is the contribution margin?
Assumptions: Revenue = $5,000; Fixed Costs = $1,200; Variable Costs = $3,000.
56) A fraction has two parts; the numerator is the top number and the ___________ is
the bottom number.
57) CMS estimated that hospital coders would incur productivity losses after ICD-10
implementation over a period of:
A: 6 months
B. 12 months
C. 18 months
58) “__________ assets” is another word for short-term assets.