RCA Exam Flashcards
Who is the Chief Financial Officer of the Residential Care Facility?
The Administrator
What are “the Books”?
1) set of records that list each monetary (all money earned or spent) of the facility
2) used to prepare the financial statements
Financial Statements
1) summary of all the transactions recorded in “the books”.
2) reflect the soundness of, the facility’s finanancial well-being within a time frame
GAAP
Generally Accepted Accounting Principles
1) consistent standards of accouting that allow the finacial records to be understood by various parties
2) They permit the financial statements of various homes to be easily compared
Comparability
financial statements of various homes to be more easily compared
Full Disclosure
all financial information (all money spent, earned, invested, or owed) must be shown in the financial records to represent it’s financial standing
Source Documents
peices of paper that are evidence of transactions, such as; receipts, bills, bank statements, etc
Cash Accounting
expenses are recorded WHEN THE CASH is actually disbursed and revenues are recorded WHEN THE MONEY is received
Accural Accounting
revenues are recorded WHEN THEY ARE EARNED and expenses WHEN THEY ARE INCURRED, regardless of the time the cash transactions take place
the revenue is recognized when the services are provided, rather than when received
used by Medicare and health care facilites
assets
things OWNED by the facility
liabilities
things OWED by the facility, or it’s obligations
capital
money invested in the facility
aka; facility’s net worth
aka; facility’s equity
Cash Flow Statement
contains CASH FLOWS from operating, investign, and financing activities
acts as a “corporate checkbook”
Net Worth
assets minus liabilities
assets - liabilities = net worth
Revenues
earnings from operations or other sources
Expenses
cost of salaries, supplies, and so on, that have been used up
Journal
the first place transactions are recorded, the books of entry (cash receipts, bilings, accounts payable, payroll, etc)
Double-entry Book-keeping
for each transaction, TWO entires are made in the journal, a debit and a credit
when all debits and credits are totaled at the end of the month, they should equal
Trail Balance
indicates whether or not an error has been made in recording the transactions
General Ledger
a summary of all debits and credits contained in the journals for the time period
at the end of the month, when all enries have been made in the journal accounts, the financial information is posted to the ledger
has a page for each account in the Chart of Accounts
Chart of Accounts
a list of names and numbers of all the accounts used in the business
normally are accounts for subcategories
ex; assets, liabilities, owner’s equity, revenues, expenses, etc)
Income Statement
shows whether REVENUES were sufficient to COVER EXPENSES
shows wheter the facility made or lost money during the time period
is a measure of financial flows OVER TIME
Balance Sheet
report that summarizes a firm’s assets, liabilities, and owner’s equity at a specific date/proint in time
financial snapshot, picuture of the finances right then/right now
The Income Statement and Balance Sheet are prepared directly from the…
General Ledger
Break-Even Point
the point of which total REVENUES for a firm or a program are EQUAL to the total EXPENSES incurred
EBITDAR
Earnings Before Interest, Taxes, Depreciation, and Rent
shows cash flow available to pay interest, rent, and taxes after paying operational costs
used by potential lenders to determine credit-worthiness of an entity
Current Assets
Possessions of the facility that will be or can be turned into cash within 12 months.
Depreciation
an expense associated with the use of an asset
Useful Life
the number of years the item can be expected to be used by the facility
How to Determine the Annual Depreciation Expense
historical cost divided by useful life
Straight Line Depreciation
historical cost of an asset is spread evenly over its useful life so that the depreciation expense is the same in every time period that it functions
cost of equipment minus (-) the salvage value equals (=) __X____. X divided by the number of years divided by 12 months equals (=) the straight line depreciation
Working Capital
Working Capital = current assets minus (-) current liabilities
Current Ratio
Current Ratio = current assessts divided by current liabilities
Hours per Patient Day
hours per patient day =
number of hours worked divided by number of patients/residents
Cost per Patient Day
cost per patient day =
costs in month divided total patient days in the month divided by the average number of patients during the month
Cost per Day
Number of residents by (x) the number of days in the month by (x) the cost of raw food per day
Variable Costs
costs that FLUCTUATE, CHANGE due to changes in volume
ex; food, nursing supplies, etc
Fixed Costs
costs that DO NOT CHANGE due to changes in volume
ex; rent, administrator’s salary, etc
Direct Costs
DIRECTLY attributable to a revenue center of DIRECTLY providing resident care
(ex; nursing salaries, benefits, payroll taxes, etc)
Indirect Costs
CANNOT BE DIRECTLY associated yet support the functions of the resident care centers
(ex; for the nursing department - payroll, utilitiy, housekeeping, dietary, laundry, etc)
Assets = Liabilities + Capital
“the accounting equation”
assets of a firm are equal to the claims of the creditors plus the claims of the owners
the balance sheet is a detailed statement of this equation
LIFO
Used for inventory control-
Last In, First Out
Inventory added last is used first
ex; cleaning products
FIFO
Used for inventory control-
First In, First Out
The older inventory is used first
ex; food
