Question 1
Exam 3
Which of the following provides detail on the organization's structure, accounting practices,
and financial standing?
Selected Answer: C. Notes to the financial statements
Question 2
What measuring unit reports the effects of all financial transactions in terms of constant
purchasing power?
Selected Answer: B. Constant dollars
Question 3
Which of the following is perhaps the most critical measure of performance in the market-
factor category?
Selected Answer: D. Market share
Question 4
Which of the following measures the resource intensity of outpatient services by measuring
the number of paid HCPCS codes on each claim?
Selected Answer: C. Service mix index
Question 5
In 20X4, Olentangy Health Care's (OHC) cost of capital was 6%. Its investments are
$80,000on a historical cost valuation basis, $100,000 on a replacement cost basis, and
$110,000 on a current market value basis. If you were on OHC's board, what minimum level
of annual cash flow would you require in order to continue operations and proceed with
planned significant new investments?
Selected Answer: B. $6,000
Question 6
Using the information below, calculate net patient service revenues. The table below is a list
of accounts at December 31, 2012, for Healthy Clinic (dollars are in thousands.)
Selected Answer: C. $430
Question 7
What is the basis for determining how much investment in assets is necessary for a healthcare
firm?
Selected Answer: D. Revenue
Question 8
Which of the following is a fundamental premise of accounting that means that transactions of
a business enterprise are recognized during the period to which they relate, not necessarily
during the periods in which cash is received or paid?
Selected Answer: D. Accrual accounting
Question 9
If the balance sheet is a snapshot of the organization at a certain date, which of the following
can be thought of as a video clip showing the running total of funds generated and expended
during the period?
Selected Answer: A. Statement of operations
Question 10
Which of the following is most directly related to strategic financial planning?
Selected Answer: A. ROI
Question 11
Which of the following can still have a sizable influence on a healthcare firm's profitability,
even considering that many payers have fixed-fee-reimbursement schedules?
Selected Answer: D. Pricing
Question 12
It is widely believed that which of the following directly or indirectly controls up to 85% of
all healthcare expenditures?
Selected Answer: A. Doctors
Question 13
Which of the following represents the present method used by accountants?
Selected Answer: B. Unadjusted historical cost method
Question 14
Rates of payment for what type of patients serve as an indirect method of controlling nursing
home capacity?
Selected Answer: B. Medicaid patients
Question 15
A program in a healthcare firm with a small or negative ROI but a high community need is
referred to as which of the following?
Selected Answer: A. Samaritan
Question 16
Which of the following represents the difference between the price paid to acquire another
entity and the fair market value of the acquired entity's assets, less any related obligations or
liabilities?
Selected Answer: D. Goodwill
Question 17
If an organization's board of directors were to set aside assets to be used for replacement of
plant and equipment, where would this be reflected on the balance sheet?
Selected Answer: A. Assets limited as to use
Question 18
During the year, Calabash Clinic made a $50,000 cash payment toward its bank loan, which it
had previously recorded; $40,000 was for principal, and $10,000 was to pay the full amount of
interest due. What is the best way for this transaction to be recorded?
Selected
Answer: A. Decrease cash by $50,000, decrease notes payable by $40,000, and
decrease equity by $10,000
Question 19
What is net working capital?
Selected
Answer: B. Current assets less term liabilities and the amount of permanent financing
required to finance working capital or current assets
Question 20
In most years and for most healthcare firms, how is a healthcare firm likely to increase its
equity over the course of the year?
Selected Answer: D. By making a profit
Question 21
The use of what method postpones the recognition of gains or losses from holding assets until
the point of sale or retirement?
Selected Answer: A. Acquisition cost valuation
Question 22
Growth in what industry is inextricably linked to government payment and regulatory policy?
Selected Answer: C. Nursing homes
Question 23
On the last day of the accounting period, a donor makes a permanently restricted donation of
$1 million. How would this transaction affect the financial statements that will be prepared
(vis-à-vis last period's statements)?
Selected
Answer: B. The balance sheet would be affected, and the statement of operations
would be unaffected.
Question 24
The Affordable Care Act aimed to increase coverage by providing for an expansion of which
of the following for adults with incomes at or below 138% of poverty?
Selected Answer: A. Medicaid
Question 25
Which convention permits certain transactions to be treated out of accordance with generally
accepted accounting principles?
Selected Answer: B. Materiality
Question 26
Which of the following is the most important long-term financial metric that can be included
on a financial dashboard?
Selected Answer: B. Return on equity
Question 27
Which of the following represents an amortization of assets purchased over a long period,
usually many years?
Selected Answer: C. Depreciation expenses
Question 28
Which of the following is a system in which an entity's assets and liabilities are segregated in
the accounting records?
Selected Answer: D. Fund accounting
Question 29
Which of the following, with all of its faults, is the basis on which the accounting profession
has chosen to value assets and liabilities in most circumstances?
Selected Answer: C. Historical cost valuation
Question 30
Which of the following represents the difference between established rates for services and
rates billed to special patients such as employees, physicians, and clergy?
Selected Answer: C. Courtesy allowance
Question 31
True or False? Sustainable growth is the principle that no organization can grow its equity at a
rate greater than its assets over the long-term.
Selected Answer: False
Question 32
True or False? With successful financial planning, debt can be viewed as the balancing
variable between asset growth and profitability.
Selected Answer: False
Question 33
True or False? A source of “other operating revenue” on the Ohio State Medical Center
financial statements might include income from the investment of unrestricted funds.
Selected Answer: False
Question 34
True or False? The statement of operations reflects how much cash came in to the organization
and how much went out during the past year (or other accounting period).
Selected Answer: False
Question 35
True or False? Healthcare firms can reasonably expect to finance all of their investment needs
with debt.
Selected Answer: False
Question 36
True or False? If a healthcare provider had no competitors and operated as a monopoly, it
could conceivably dictate price to virtually all payer groups except Medicare and Medicaid.
Selected Answer: True
Question 37
True or False? Comparative benchmark data are a crucial ingredient to the success of any
dashboard reporting system.
Selected Answer: True
Question 38
True or False? While making a strategic plan, a healthcare organization should first see if the
plan is financially feasible.
Selected Answer: False
Question 39
True or False? When a firm adopts a “no growth” policy, that means the firm should have a
zero-growth rate in assets.
Selected Answer: False
Question 40
True or False? Cash and unrestricted net assets should always be equal.
Selected Answer: False
