Chapter 26 - Finanical Managment Flashcards
Accounting
1.The process of collecting, recording, and reporting an organization’s financial data 2.A list of all disclosures made of a patient’s health information.
Accounting rate of return (ARR)
The projected annual cash inflows, minus any applicable depreciation, divide by the initial investment
Accounts payable
Records of the payments owned by an organization to other entities.
Accounts receivable
- Records of the payments owned to the organization by outside entities such as thirdparty payers and patients 2. Department in a healthcare facility that manages the accounts owed to the facility by customers who have received services but whose payment is made at a later date.
Accrue
The process of recording known transactions in the appropriate time period before cash payments/ receipts are expected or due.
Activity-based budget
A budget based on activities or projects rather than on functions or departments
Balance Sheet
A report that shows the total dollar amounts in accounts, expressed in accounting equation format, at a specific point in time.
Capital budget
Budget that focuses on long-term investments
Centers for Medicare and Medicaid Services (CMS)
The Department of Health and Human Services agency responsible for Medicare and parts of Medicaid. Historically, CMS has maintained the UB-92 institutional EMC format specifications, the professional EMC NSF specifications, and specifications for various certifications and authorizations used by the Medicare and Medicaid programs. CMS is responsible for the oversight of HIPAA administrative simplification transaction and code sets, heath identifiers, and security standards. CMS also maintains the HCPCS medical code set and the Medicare Remittance Advice Remark Codes administrative code set
Conservatism
Compliance of financial data in that they fairly represent the financial results of the period and do not overstate or understate information in a significant (material) way
Consistency
Principle that requires that the accounting method not change over the life of the asset
Corporation
An organization that may have one or many owners in which profits may be held or distributed as dividends
Cost accounting
The specialty branch of accounting that deals with quantifying the resources expended to provide the goods and services offered by the organization to its customers, clients, or patients
Current ratio
The total current assets divided by total current liabilities.
Days in accounts receivable
The ending accounts receivable balance divided by an average day’s revenues
Debt ratio
The total liabilities divided by the total assets
Debt service
The current obligation of an organization to repay loans
Depreciation
The allocation of the dollar cost of a capital asset over its expected life
Direct Cost
Resources expended that can be identified as pertaining to specific goods and services
Equity
Securities that are shared in the ownership of the organization.
Expense
Amounts that are charged as costs by an organization to the current year’s activities of operation
Favorable variance
The positive difference between the budgeted amount and the actual amount of a line item, that is, when actual revenue exceeds budget or actual expenses are less than budget
Financial Accounting Standards Board (FASB)
An independent organization that sets accounting standards for businesses in the private sector
Fiscal year
A consecutive 12-month period an organization uses as its accounting period
Fixed budget
A type of budget based on expected capacity with no consideration of potential variations
Fixed cost
Resources expended that is based on multiple levels of projected productivity
Flexible budget
A type of budget that is based on multiple levels of projected productivity
For-profit organization
The tax status assigned to business entities that are owned by one or more individuals or organizations and that earn revenues in excess of expenditures that are subsequently paid out to owners or stockholders.
General ledger
A master list of individual revenue and expense accounts maintained by an organization
Generally accepted accounting principles (GAAP)
An accepted set of accounting principles or standards, and recognized procedures central to financial accounting and reporting
Going concern
Organization’s ability to operate for the foreseeable future after an analysis of an entity’s financial data
Income statement
A statement that summarizes an organization’s revenue and expense accounts using totals accumulated during the fiscal year
Indirect cost
Resources that cannot be identified as pertaining to specific goods or services
Internal rate of return (IRR)
An interest rate that makes the net present value calculation equal Zero
Internal Revenue Service
Entity that regulates and collects federal taxes
Liability
1.A legal obligation or responsibility that may have financial repercussions if not fulfilled. 2. An amount owed by an individual or organization to another individual or organization
Liquidity
The degree to which assets can be quickly and efficiently be turned into cash
Managerial accounting
The development implementation and analysis of systems that track financial transactions for management control purposes including both budget systems and cost analysis systems
Matching
A concept that enables decision makers to look at expenses and revenues in the same period to measure the organization’s income performance
Materiality
The significance of a dollar amount based on predetermined criteria
Net assets
The organization’s resources remaining after subtracting its liabilities
Net assets
The organization’s resources remaining after subtracting its liabilities
Net income
The difference between total revenues and total expenses
Net loss
The condition when total expenses exceed total revenue.
Net present value (NPV)
A formula used to assess the current value of a project when the monies used were invested in the organization’s investment vehicles rather than expended for the project; this value is then compared to the allocation of the monies and the cash inflows of the project , both of which are adjusted to current time
Not-for-profit organization
An organization that is not owned by individuals whose profits are retained by the organization and reinvested back into the organization for the benefit of the community it serves
Operational budget
A type of budget that allocates and controls resources to meet an organization’s goals and objectives for the fiscal year
Overhead cost
The expense associated with supporting but not providing patient care services.
Partnership
Business relationship where two people share in the responsibility for the business, and income still flows through the individuals’ tax returns
Payback period
A financial method used to evaluate the value of a capital expenditure by calculating the time frame that must pass before inflow of cash from a project equals or exceeds outflow of cash
Profitability
Refers to an organization’s ability increase in value.
Public Company Accounting Oversight Board (PCAOB)
Created by Sarbanes-Oxley Act, this board oversees the audits of companies that are publicly traded. Sarbanes-Oxley had a significant impact on the degree of scrutiny and testing of internal controls, financial reporting, and governance of organizations
Return on investment (ROI)
The financial analysis of the extent of value a major purchase will provide
Revenue
The recognition of income earned and the use of appropriated capital from the rendering of services during the current period
Revenue Principle
States that earning as a result of activities and investments may only be recognized when they have been earned, can be measured, and have a reasonable expectation of being collected
Securities and Exchange Commission (SEC)
The federal agency that regulates all public and some private transactions involving the ownership and debt of organizations
Sole proprietorship
A venture with one owner in which all profits are considered the owner’s personal income
Statement of cash flow
A statement that details the reasons that cash changed from one balance sheet period to another
Statement of retained earnings
A statement expressing the change in retained earnings from the beginning of the balance sheet period to the end
Statement of stockholder’s equity
A statement detailing the reasons for changes in each stockholder’s equity accounts
Total margin ratio
Measurement of overall profitability of an organization that compares excess of revenue over expense by total revenue
Variable cost
Resources expended that vary with the activity of the organization
Variance
A disagreement between two parts; the square of the standard deviation; a measure of variability that gives the average of the squared deviations from the mean; in f inancial management, the difference between the budgeted amount and the actual amount of an line item; in project management, the difference between the original project plan and current estimates
Zero-based budget
Types of budgets in which each budget cycle poses the opportunity to continue or discontinue services based on available resources so that every department or activity must be justified and prioritized annually to effectively allocate resources
