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Unit 16 > Finance and Accounting > Flashcards

Finance and Accounting Flashcards

1
Q

finance vs. accounting

A

finance: money management

Accounting: providing financial information

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2
Q

what does 70% of expenses in healthcare come from/

A

paying the employee

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3
Q

Accounts receivable correlates with what?

A

revenues: the dollars and cents accrued from doing business

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4
Q

Accounts payable correlates with what?

A

expenses: the cost of doing business

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5
Q

What are three major sources of revenue/accounts receivable?

A

cash based services

insurance based services

contracted services

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6
Q

definition of direct costs

A

it is directly tied to the good or service

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7
Q

definition of indirect costs

A

something needed for the delivery of the good or service but not directly the service

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8
Q

What are the two main direct costs that you incur?

A

Salaries and equipment!

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9
Q

What are some examples of indirect costs

A

rent
electric
overhead

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10
Q

total cost = what other three factors?

A

fixed cost + variable cost + semi-variable costs

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11
Q

What is the definition of a semi-variable cost?

A

something that has both a fixed and variable cost (cell phone with data)

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12
Q

in rehab cost is associated with a what?

A

unit of service; this 1 unit changes based on the setting you’re practicing in

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13
Q

total cost = _____ + ______

A

total cost = fixed cost + variable cost

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14
Q

average cost = ______/______

A

average cost = total cost/volume

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15
Q

marginal cost = ______/_______

A

marginal cost = change in total cost/change in volume

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16
Q

As the volume of visits increases the _______ _____ __ _____goes down

A

As the volume of visits increases the AVERAGE COST OF VISITS goes down

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17
Q

The average cost diminishes the more _______ you provide

A

The average cost diminishes the more UNITS OF SERVICE yo . provide

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18
Q

Explain break even analysis

A

finding the specific volume at which a business neither makes nor loses money

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19
Q

Break even analysis = _____ + ______

A

break even analysis;

expenses = revenues

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20
Q

Break even quantity = _____/(____-_____)

A

break even quantity = fixed cost/ (price-variable cost per UOS)

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21
Q

what is the process of identifying, recording, summarizing and reporting in monetary terms, information about an organization during a specific period of time

A

accounting

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22
Q

Foundation for accounting information systems within an organization is called what?

A

chart of accounts

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23
Q

Payments that come in are called what?

A

assets

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24
Q

What is owed to the business is called accounts ______

A

receivable

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25
Q

When a financial event (transaction) happens, it is posted in a ledger in two places/double entry. What are they?

A

Increase in entities cash account

Decrease in accounts receivable (what is owed to the business)

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26
Q

______ are economic resources that are owned by a business and are expected to benefit future operations

A

assets

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27
Q 
Intentories
Accounts receivables
capital assets
cash 
investments

are all what?

A

Assets! If you went under today what could you liquidate in order to get money

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28
Q

liabilities = ______

A

debts

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29
Q

total liabilities (debts) make up the amount of the organizations _____ owed by its creditors

A

assets

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30
Q

Accounts payable
Accrued expenses
notes payable

are all what?

A

liabilities

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31
Q

balance sheet lists what three things

A

assets
liabilities
owners equity

32
Q

Balance sheet tell us _______ ______

A

net worth/owner’s equity

33
Q

Owner’s equity = ______ - ________

A

Owners equity (net worth) = assets - liabilities

34
Q

net worth is also called what?

A

owners equity

35
Q

Assets = ______ + ______

A

assets = net worth + liabilities

36
Q

What are the four core fundamental financial statements?

A
  • balance sheet
  • income statement
  • cash flow statement
  • retained earnings statement
37
Q

What are financial statements?

A

reports presenting summative information about an organizations revenues and expenses in a standard format

38
Q

what can be used to compare past and current performance?

A

financial statements

Each statement is interrelated so together they are used to view the financial health, stability and growth potential of an organization as well

39
Q

What is a red flag in financial analysis?

A

variances: they need to be looked at more closely for their cause

40
Q

which of the four fundamental financial statements shows how an organization’s cash position changes overtime?

A

Cash flow statement: shows where you’re at at any given point in time with the cash you have on hand

41
Q

Which one of the four fundamental financial statements would you look at if you wanted to know how much money you have on hand to cover short term liabilities?

A

cash flow statement

42
Q

Accounts receivable or payable?

What you think you’ll be paying out

A

accounts payable

43
Q

Which one of the four fundamental financial statements would you look at if you wanted to know details on how owner’s equity changed?

A

retained earnings statement

44
Q

Which one of the four fundamental financial statements would you look at if you wanted to know how profits are used in a business?

A

retained earnings statement: tells you if profits are distributed to the owners or reinvestied into the business

45
Q

what is another name for the retained earnings statement?

A

owner’s equity statement

46
Q

Which one of the four fundamental financial statements is a report of an organization’s financial performance over a specific period of time?

A

income statement: compares monies earned (revenues) to monies spend (expenses)

47
Q

income statement compares what two things? and what does the difference btwn them give you

A

revenues to expenses.

The difference btwn the two give you net income or loss from operations

48
Q

profit and loss statements
statement of operations

are alternate names for which of the four fundemental financial statements?

A

income statements

49
Q

Which one of the four fundamental financial statements would you look at to know the “health status” of a business?

A

income statement

50
Q

Explain when the contribution margin shows a loss ______ exceeds _____

A

expenses exceed revenues = loss

51
Q

Explain when the contritubition margin shows a profit _____ exceeds _____

A

revenues exceed expenses = profit

52
Q

revenues = cost is called what point?

A

break even point

53
Q

revenue is _____ income

A

gross income: meaning before anything is taken out or paid

54
Q

how is revenue (gross income) normally generated?

A

number of minutes of service, codes for op etc.

55
Q

Contribution margin = ________ - _______

A

contribution margin = revenues - expenses

56
Q

Charge 160 for a visit and you have contractural allowance of 80% of charges what is the revenue?

A

160(.80)

57
Q

If revenue is 96 dollars and you spend 50 dollars in money for an individuals visit, what is the contribution margin?

A

46 dollars

58
Q

Operating income = contribution margin - allocated expenses

A

if you have 46 dollars as your contribution margin, and then have 20 dollars allocated expenses, the operating income is actually only 26$

59
Q

Operating income concept

A

your contribution margin has to still be positive when you take into account costs that happen no mater if you continue doing business or not (marketing etc). You have to be able to continue to help the organization as the whole.

60
Q

A ______ is a financial statement that estimates income and expenditures for specified future time periods

A

budget

61
Q

Name the three things that generally happen when creating a budget

A

scan environment
identify goals and objectives complementary to the organizations plan, policies etc.
gather data on estimated costs and revenues

62
Q

what is the goal of revenue management?

A

maximize income from operations and investments

63
Q

setting prices
identifying the payer for each service or product
policies and procedures that address the provision of the service, recording delivery of the service and collecting reimbursement
estimating expected payment
following procedures for payment receipt
Financial reporting

are all ways to manage what?

A

revenue management

64
Q

net revenue/1 visit = what?

A

total revenue/total number of visits

65
Q

ADC is what and part of what in finance

A

average daily census; very important for revenue management

66
Q

name the 6 things that are super important for revenue management

A

10 volume/average daily census

arrival rate

Units/units per visit

case mix

conversion rate (net revenue as % of charges)

total revenue

67
Q

arrival rate = _________/______

A

arrival rate = scheduled visits/actual visits

68
Q

conversion rate, part of revenue management, is what?

A

net revenue as % of charges; you have different contractural allowances, based on your case mix you’ll have multiple payors so this looks at everything as a whole.

69
Q

what is the goal of expense management

A

maximizing NET income

70
Q

define operating expenses

A

cost of resources to produce the organizations serves and goods in a limited time period

71
Q

define capital expenses

A

big-ticket, long lasting items

72
Q

what are most of your expenses in healthcare coming from?

A

70% is employees!

73
Q

what is a super important thing to look at with expense management?

A

management of employees! 70% of expenses in healthcare come from here

74
Q

influencing the utilization of mixed or variable cost items is part of what piece of management?q

A

expense management

75
Q

1 FTE = how many hrs per week?

A

40

76
Q

productivity is defined as what

A

how many hours are they able to bill for based on how many hours they’re available for in a year

(have to get available productive hours first and then determine 6-8 hours a day should be billable time)

77
Q

what are the four KPI’s we talked about?

A

volume: referrals, ADC

net revenues: as % of charge, as well as per visit

expenses/costs: labor cost per UOS and non labor costs per UOS

efficiency: productivity, total paid hours per UOS

Unit 16 (8 decks)

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