Hesm 520 test (fundamentals of accounting and finance)

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1. Which of the following is the primary goal of a not-for-profit healthcare organization? Choose the best answer.

2. Culver County Hospital has the lowest cost of any hospital in its region. However, it has continually reported very large operating losses and has depended upon tax support from the county. Assuming that positive operating margins are an objective of Culver County Hospital, the hospital could be described as:

3. The controller in a hospital is usually responsible for which of the following activities (choose all that apply): 

4. One use of financial information is to assess the efficiency of operations. In that context, efficiency refers to: 

5. A department manager most often uses his or her hospitals’ financial information for which of the following uses: 

6. The breakeven point occurs where:

7. Assume that the clinic used the price that they need to exactly break even at 10,000 shots. Fewer people than expected showed up and purchased the flu shot. The clinic would:

8. A statement that reports inflows and outflows of cash during the accounting period in the categories of operations, investing, and financing, is called a (an):

9. A statement that reports the financial position (assets, liabilities, and stockholders’ equity) of an accounting entity at a point in time is called a (an):

10. The heading of every financial statement should contain the:

11. If the total book value of the assets of the accounting entity is $4,350,000, and the total liabilities of the accounting entity are $1,235,000, the stockholder’s equity in the accounting entity is:

12. A for-profit nursing home has beginning-of-period retained earnings of $40,000. Net income for the period totals $75,000 and dividends declared during the period total $15,000. The balance sheet total for retained earnings will be what amount?

13. Total revenues for the period are $50,000, operating expenses and costs $30,000, gains $3,000, and losses $1,000. The net income before taxes will be what amount?

14. Which of the following reflects the fundamental accounting equation (or balance sheet equation) in a not-for-profit, business-oriented healthcare organization?

15. Deferred revenues are:

16. The _____ is a way for organizations to improve the collection and communication of financial and operating information.

17. Which of the following is the BEST example of a financial metric?

18. _____ is the most important financial metric to review to determine long-term financial viability.

19. Which of the following is not one of the four critical questions that must be answered for dashboard reporting?

20. What is/ (are) the primary determinant(s) of firm value?

21. A nursing home projects asset growth at 10 percent per year over the next 10 years. If it wishes to reduce its reliance on debt financing, what rate of equity growth over the 10-year period will be desired?

22. How can a for-profit healthcare firm increase its equity?

23. Program A has a profit of $5,000 and an investment of $100,000, while program B has a profit of $10,000 and an investment of $220,000. Which program has the better ROI?

24. What is net working capital?

25. A program in a health care firm with high market share and low ROI is regarded as a:

Numeric Problems (25 points)

1. Given below is a list of account balances for Currie Hospital as of December 31, 2013. Prepare a balance sheet as of December 31, 2013, in proper form. (Hint: You will need to compute the net assets account. Assume that all net assets at the beginning of the year are unrestricted.)

Account

Balance

Gross plant & equipment

$6,000,000

Accounts payable

130,000

Inventories

100,000

Other current liabilities

70,000

Net accounts receivable

650,000

Accrued expenses

100,000

Accumulated depreciation

200,000

Long-term debt

5,000,000

Cash

210,000

2. Below is a list of accounts for Currie Hospital for December 2013 (annual amounts). Prepare a statement of operations for 2013 in good form.

Account

Amount

Administrative expenses

$80,000

Net assets released from temporarily restricted accounts for operations

120,000

Labor expense

260,000

Interest expense

12,000

Net patient service revenue

840,000

Supply expense

88,000

Transfer to parent corporation

10,000

Bad debt expense

40,000

Depreciation expense

50,000

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