final Flashcards
The “near term”, “short-term” or “current” in accounting means [ ] or less
12 months
Viability is measured by [ans1] and [ans2]. Pick 2
solvency and liquidity
Whether for profit or not-for-profit, health organizations need profits (T/F)
true
There is always a trade off between profit and risk (T/F)
true
The two overriding goals of financial management are [ans1] and [ans2]. Pick 2
viability and profitability
The difference between a providers posted charge for service and the amount agreed to by the provider and third party payer is a:
contractual allowance
Charity Care and Bad Debt Expense are the same in Accrual Accounting (T/F)
false
Charges are the same as revenues in accounting (T/F)
false
all patients pay their financial obligations
false
The first item listed on healthcare financial statements and reflects the adjustments of charity care and contractual adjustments is known as
net patient services revenue
going concern
statements are prepared based on assumption of longevity. If that is not likely the case then it must be disclosed
conservatism
Consideration should be given to risks the organization faces
matching
Expenses should be recorded in the same period as the revenues they were responsible for generating
cost
the value of what was given up to acquire the item
objective evidence
Based on evidence that reasonable individuals would agree upon
materiality
If an individual would make a different decision based on the incorrect information resulting in an error
consistency
Use of the same accounting method from period to period
full disclosure
Reports should disclose any information needed to ensure that they are fair representations
tangiable assets
Resources owned by the organization that have physical form
Owners equity and net assets are the same thing in accounting terminology (T/F)
true
the fundamental accounting equation is…
assets = liabities + equity
liabilities
obligations of the organization to outside creditors
what are the three types of inflation?
demand inflation
printing money
cost push
Inflation ___________________ the value of money (the dollar)
decreases
What are three causes of Demand Inflation?
higher wages
lower unemployment
low interest rates
It takes ___________ dollars to purchase the same item during times of inflation
more
Non-profits need to disclose how liquid their organization is. (T/F)
true
Nominal accounts zero their balances prior to the next reporting period. (T/F)
true
What is the main determinant between an Investing vs. a Financing decision for an organization?
interest expense
Retained earnings is “cash on hand” for an organization to reinvest back into operations. (T/F)
false
Net Patient Services Revenue is Gross Revenue minus which deductions?
Charity Adjustments and Contractual Adjustments
What are the three sections of the Statement of Cash Flows?
financing
investing
operating
what types of accounts are real accounts
assets
liability
equity
Net Assets (equity) is the cash an organization has to invest for its future. (T/F)
false
Using the accrual method of accounting will require a Statement of Cash flows (T/F)
true
GAAP requires the use of historical valuation for which types of assets.
eqipment
plant
property
One can use different valuation methods for different assets of the organization. (T/F)
true
Equity is the amount of money I have in the bank (cash) after I account for my assets and liabilities.
false
The strength of historical cost valuation is that it is objective and verifiable. (T/F)
true
As an accountant putting forward financial statements; they should follow which three guiding principles:
full disclosure
GAAP rules
federal/state regulations
Historical cost is adjusted each year based on the wear and tear of an item. This adjustment is shown in which account?
depreciation
GAAP requires assets such as Property, Plant and Equipment to be based on what type of cost valuation method?
historical cost
Using an organization’s cash funds to purchase new equipment for the business is an example of:
capitalization
The accounting equation must always remain in balance. (T/F)
true
All elements of a financial even are known as:
transaction
Cash is increased by a credit and decreased by a debit. (T/F)
false
Double entry means that it is not possible to change one side of the accounting equation without changing the other. (T/F)
true
Capitalization must be paid for in cash (T/F)
true
Financial statements are the responsibility of the auditor or CPA (T/F)
false
An auditor reviews all documents to determine accuracy (T/F)
false
No matter which depreciation schedule is used the journal entries fro the initial purchase will remain the same (T/F)
true
The historical cost of an item less the accumulated depreciation of the item is known as
book value
Depreciation expense and accumulated depreciation are the same types of accounts in accounting (T/F)
false
Depreciation expense gets zeroed out after a financial reporting period for an organization (T/F)
true
Delaying or accelerating payments will not impact expenses if using accrual-based accounting
true
Real accounts are zeroed out after the reporting year has ended (T/F)
false
Which statement is the best evaluator of an organization’s current financial status
income statement
It is the accountant’s responsibility to make sure a future investor understands the financial statements of the organization. (T/F)
False
The idea that one will not be able to replace inventory items for lower costs because of inflation is the basis of which inventory costing method?
LIFO
