Finance / Budget Quick Facts Flashcards
Study
The ___________ is the Chief Financial Officer of the facility.
Administrator
The __________ are a set of records that , list , in a prescribed manner , each monetary transaction ( all money earned or spent) of the facility.
Books
The ________ are then used to prepare the financial statement(s).
Books
The ________ _________ are a summary of all the transactions recorded in the books, and they reflect the soundness of the organizations financial status;
the nursing facility’s financial well-being within a time frame.
financial statements
The books and financial statement are prepared according to ______ _______ ________ __________.
These are consistent standards of accounting that allow the financial records to be understood by various parties.
GAAP ( Generally Accepted Accounting Principles )
_________ ___________ - all financial information ( all money spent , earned, invested, or owed) must be shown in the financial records to represent its financial standing
Full Disclosure
______ _________ - Pieces of paper that are evidence of transactions. They can be receipts , bills, bank statements , etc.
Source Documents
What are the - Two systems of Accounting:
Cash and Accrual
__________ = expenses are recorded when the cash is actually disbursed and revenues are recorded when the money is received.
Cash
It is difficult to recognize items as depreciation and prepaid insurance in the cash system of accounting
________ = revenues are recorded when they are earned and expenses when they are incurred, regardless of the time the cash transactions taken place ( this is the system used for Medicare and most often used for residential and assisted living). Revenue is recognized when the services are provided, rather than when the cash is received.
Accrual
Allowing the facility to accurately measure revenues earned after expenses have been paid or losses incurred by the matching revenues and expenses for each time period is the advantage of the ACCRUAL system of accounting
things “ owned “ by the facility.
Assets
things “ owed “ by the facility ; or its obligations.
Liabilities
money invested in the facility , also known as the facility’s net worth or equity.
Capital
contains cash flows from operating, investing, and financing activities; as well as acts as a “ corporate checkbook”.
Cash Flow Statement
assets minus liabilities
Net Worth
net income divided by revenue
Net Profit Margin
earnings from operations or other sources
Revenues
cost of salaries, supplies, and so on, that have been used up
Expenses
for each transaction, two entries are made in the appropriate journal, a debit and credit. When all debits are credits are totaled at the end of each month, they should be equal.
Double-entry book -keeping
The __________ indicates whether or not an error has made in recording the transaction
trial balance
At the end of each month, when all entries have been made in the journal accounts, the financial information is posted to the ____________.
General Ledger (GL)
Thus, the ___________ is a summary of all debits and credits contained in the journals for the time period. It usually has a page for each account in the Chart of Accounts.
General Ledger ( GL)
A list of names and numbers of all the accounts used in a Buisness. There typically are accounts for various subcategories ( assets, liabilities, owners equity, revenues and expenses )
Chart of Accounts
If the Administrator asked the book keeper for a list containing every account in the facility, the bookkeeper would hand the administrator the Chart of Accounts
The Income Statement and the Balance Sheet are prepared directly from the ____________.
General Ledger (GL)
The _______ ________ shows whether revenues were sufficient to cover expenses, whether the facility made or lost money during the time period. A measure of financial flows over time.
Income Statement
The _______ ________ is a report summarizing a firms assets, liabilities, and owners equity at a specific date/point in time. It is a financial snapshot of an organization at a point in time.
Balance Sheet
______ _______ _______ the point at which total revenues for a firm or a program are equal to the total expenses incurred.
Break-Even Point
Earnings before interest, taxes, depreciation, amortization, rent. This shows cash flow available to pay interest, rent, and taxes after paying operational cost. It is a measure used by potential lenders of the credit-worthiness of an entity
EBITDAR
Assets=Liabilities + Capital
The Accounting Equation
Possessions of the facility that will be or can be turned into cash within 12 months
Current Assets
_____________ is an expense associated with the use of an asset
Depreciation
the number of years the item can be expected to be used by the facility
Useful Life
annual depreciation expense
Historical cost divided by useful life
= current assets - current liabilities
Working Capital
= Current assets divided by current liabilities
Current Ratio
= number of hours worked divided by number of patients/residents
Hours per patient day
= cost in month divided by total patient days in month
Cost per patient day
A system of ________ _________ is needed to measure the amount and type of supplies used by each department.
Inventory control
= those cost that fluctuate directly and proportionately with changes in volume. If the volume is increased or decreased, _________ __________ will rise or fall ( food, nursing , Supplies )
Variable Cost
= Those cost that will not change with fluctuations in the number of residents ( rent/mortgage payment, administrators salary)
Fixed cost
= those directly attributed to a revenue center or directly providing resident care ( direct cost would include nursing salaries , payroll taxes, benefits, medical supplies)
Direct Cost
= those that cannot be directly associated , yet support the functions of the residents care center ( the nursing department would be payroll, utility , housekeeping , dietary , laundry)
Indirect cost
LIFO
Last in, First out,
FIFO
First in, First out
The first place transaction are recorded; the books of original entry ( cash, receipts , billing , accounts payable , payroll)
Journal
Managed Care Financing
Managed care Organization (MCOs)
The fixed monthly payment that covers all services is called
Capitation
