Finance Flashcards
Accelerated Method of Depreciation
Any method of allocating most of the depreciation expense to the early years of an asset’s estimated useful life and smaller amounts in the later years.
What is the benefit of using the Accelerated Method of Depreciation?
It enables the owner to receive tax and/or reimbursement benefits more quickly than using the straight-line method.
Accounts Payable
Amounts owed to suppliers for goods and services.
Accounting
The process of identifying, recording, and communicating information about the financial position and results of operations of a business entity, using principles designed to facilitate informed decision-making by the entity’s mangers as well as by external groups.
What is a detailed statement of the Accounting Equation?
The balance sheet.
Accounting Equation
Assets = Liabilities + Owners’ Equity (capital)
This equation states that the assets of a firm are equal to the claims of the creditors plus the claims of the owners.
Accounts Receivable
Amounts owed to the facility for services of for the sale of goods.
Accumulated Depreciation
The total depreciation from the start of the life of a plant asset to any point in time.
On the balance sheet, there is a deduction for accumulated depreciation taken from the gross evaluation of depreciable plant and equipment to yield a net evaluation.
Accrual Basis of Accounting
A system of accounting in which revenues are recorded in the period earned and expenses are recorded in the period incurred even if cash is received or paid in a later or earlier time period.
Acid-Test Ratio or Quick Ratio
Cash and other current assets that can be converted to cash right away (such as marketable securities and current receivables) divided by current liabilities. A measure of the ability of a firm to pay its current liabilities in the very short term.
What are examples of Adjusting Entries?
Entries for depreciation expense and unused portions of prepaid expenses.
Adjusting Entries
Entries made at the end of an accounting period to record certain transactions or other accounting events that have not been recorded or have been improperly recorded during the accounting period.
Aging of Accounts Receivable
Summarizing unpaid balances in terms of age groups, such as: currently due, 1-30 days past due, 31-60 days past due, each of the remaining 30-day periods through 151-180 days past due, and finally past due more than 180 days.
How can the classification of Aging of Accounts Receivable be broken down into further classification outside of days?
By the type of debtor. Aging receivables is a step in the collections effort, in reporting on the balance sheet a deduction from accounts receivable for estimated bad debt, and in making write-off decisions.
What is an Allowable Charge?
The maximum fee that a third party will us in reimbursing or paying a provider for a service rendered.
What is an Allowable Cost?
Costs that are reimbursable under a third-party payment formula.
What is Amortization of Debt?
The periodic reduction of a debt by regular payments applied to both principal and interest over a scheduled period.
What are Ancillary Charges?
Extra charges for supplies and services, e.g., drugs and lab tests, that are not included in the per diem rate.
What are penalties of using violating the Anti-Kickback Law?
Subject to criminal penalties or exclusion from participation in the MCR & MCD programs, or both.
Anti-Kickback Law
The MCR and MCD Anti-Kickback Law penalizes anyone who knowingly and willfully solicits, receives, offers, or pays remuneration in each or in kind to induce, or in return for:
A) Referring an individual to a person for the furnishing, or arranging for the furnishing, of an item or service to be paid for by the MCR & MCD program.
B) Arranging or recommending the purchase, lease, or order of goods or services to be paid for under MCR or MCD.
Assets
Resources owned by a business that are measured in monetary terms. On a balance sheet, assets are generally classified into current and noncurrent portions.
Current Assets
Are cash, accounts receivable, supply inventories, and prepaid expenses.
Noncurrent Assets
Include Property, Plant and Equipment (PP&E) (also referred to as fixed assets, capital assets, or plant assets) which are assets having an estimated life in excess of one year and not intended for sale in the ordinary course of operations.
Assisted Living Facility
(ALF)
Term applied to broad array of residential options for frail seniors who need assistance with one or more ADLs, such as dressing or bathing, but do not require continuous skilled nursing care.
Generally emphasize a homelike environment offering a maximum amount of independence and privacy.
Audit
Examination of accounting systems, controls, and records to ascertain their conformity to legal and professional standards and their adequacy in protecting against loss of assets by fraud and waste.
Bad Debt
An account receivable determined to be uncollectable.
Balance Sheet or Statement of Financial Position
A report summarizing a firm’s assets, liabilities and owners’ equity at a specific date.
Bank Statement
Statement sent by a bank to a bank account holder showing beginning and ending balances, and all transactions in the account for a month.
Bank Statement Reconciliation
Process of explaining and correcting any discrepancies between a bank statement balance and the depositors record of the cash balance.
Benefit Period
Period of consecutive days during which covered services furnished to a patient, up to certain specified maximum amounts, may be paid for by an insurance plan.
Each insurance has its own definition of benefit period.
Medicare Benefit Program
Begins with the first day a beneficiary is a hospital inpatient. It ends when 60 consecutive days have elapsed during which the patient was neither an inpatient of a hospital nor of a SNF.
A beneficiary is an inpatient in a SNF only if the beneficiary receives what MCR considers a skilled level of care during the stay that earns reimbursement under MCR & MCD.
What is the MCR benefit?
Pays for up to 100 days of SNF care per benefit period. Days 1-20 are covered 100% and for days 21-100, there is an out-of-pocket cost to the resident. (coinsurance)
Bidding
The process of requesting from vendors a response (bid or offer) to provide goods or services according to written specifications. The bidding may be closed (directed to select bidders) or open (to all bidders). The bids may be negotiated before the contract is final.
Bonds
Interest-bearing notes, usually in $1,000 or $5,000 amounts, in which the issuer (borrower) promises to repay the bondholder (lender) the principal and interest of a loan according to a schedule.
What is the Break-Even Point?
The point at which total revenues for a firm or a program are equal to the total expenses incurred. This may be illustrated on a graph where revenues (and expenses) are plotted on the vertical axis while resident-days are plotted on the horizontal axis.
Bookkeeping
The clerical process of recording the financial transactions of an organization.
Cash Basis of Accounting
A system of accounting in which revenues are recorded when cash is received, and expenses are recorded when cash is paid. (Contrast with Accrual Basis of accounting)
How are residents’ classified in Case-Mix-Payment Systems?
Assessments are conducted to classify covered residents into defined groups based primarily on functional disability scores, but certain diagnoses, service needs, and behavioral problems may also be considered.
Case-Mix-Based Payment Systems
Payment systems used by MCR and many state MCD programs under which the per diem rates for each NF are determined in part by some measure of the acuity, and thus the likely resource consumption, of each covered resident in the facility.
Is the per diem rate different for each group in a Case-Mix-Payment System?
Yes, with higher rates paid for residents needing and receiving more services.
Cash Flow
Cash inflows from collections of revenues and other sources minus cash outflows for payments of expenses and liabilities. A cash budget or cash-flow forecast projects these amounts, whereas a cash-flow report shows actual experience.
Chart of Accounts
A list of names and numbers of all the accounts used in a business. There typically are accounts for various subcategories of each of the following: assets, liabilities, owner’s equity, revenues, and expenses.
Contractual Discount
The difference b/w the rate the faciloity normally charges for services to its self-pay residents, and the lower rate that the facility has agreed to receive as reimbursement from MCR, MCD, or other third-party payers.
For external reporting purposes, how are revenues recorded?
As the amounts actually to be collected.
For internal reporting purposes, how are revenues to be recorded?
Management may record such contractual discounts as deductions from operating revenues on the income statement and accounts receivable on the balance sheet so that the amount of discounts given to each payer class is known.
Controller or Comptroller
The chief accountant of a firm.
Corporate Integrity Assessment
An agreement negotiated by the Office of Inspector General (OIG) with a healthcare provider as part of the settlement of a federal healthcare program investigation arising under the FalseClaimsAct. To avoid worse penalties, a company may agree to such compliance activities as: hire a compliance officer or appoint a compliance committee, develop written standards and policies, implement an employee training program, and/or return an independent review organization to review claims submitted to federal health care programs.
Cost Center
An organizational unit charged with responsibility for controlling its own costs, and so its costs (for salaries, supplies, etc.) are separately accumulated in the accounts. A cost center may more may not be a revenue center, i.e., a unit providing direct services to patients for which they are charged.
Current Ratio
Current assets divided by current liabilities.
A measure of a firm’s ability to pay current debts. A current ratio below 1.00 (or 1:1) may indicate problems in meeting current liabilities as they become due.
