Question 1

The net cash & cash equivalents from an end of fiscal year statement of cash flows should match the ____.

Accepted Answer

The net cash & cash equivalents from the end of a fiscal year statement of cash flows should match the cash & cash equivalents line item on the balance sheet. This is because the statement of cash flows is designed to explain the change in cash and cash equivalents reported on the balance sheet from one period to the next.

Question 2

What is the accepted method for a healthcare facility to get money into its petty cash fund?

Accepted Answer

The accepted method for a healthcare facility to replenish its petty cash fund is to cash a check written against the operating checking account. This ensures proper accounting and tracking of funds.

Question 3

A medical practice uses its revenues to purchase a $20,000 certificate of deposit that matures in two years. The $20,000 CD should be recorded as ____.

Accepted Answer

A certificate of deposit that matures in two years is considered a long-term investment because it is not expected to be converted into cash within one year.

Question 4

In a sole proprietorship physician practice, only the physician can sign checks.

Accepted Answer

In a sole proprietorship physician practice, the physician can authorize employees or other individuals to sign checks on the business account, depending on the banking arrangements made.

Question 5

Under accrual accounting, patient charges for medical services are posted as revenues on the date ____.

Accepted Answer

Under accrual accounting, revenues are recognized when earned, regardless of when the payment is received. Therefore, patient charges for medical services are posted as revenues on the date of service.

Question 6

Which of the following is true about payroll in a large healthcare facility?

Accepted Answer

Payroll tasks in a large healthcare facility are complex and labor-intensive due to the large number of employees, varying shifts, and compliance with healthcare regulations.

Question 7

When reconciling a bank statement for the operating checking account of a medical practice, the bookkeeper sees two bank charges of $25 for stopping payment on checks that vendors said did not arrive in the mail. The bookkeeper should ____.

Accepted Answer

The correct action is to make two journal entries in the account ledger to reflect the bank charges for stopping payment on checks. This ensures the financial records accurately represent all transactions and fees incurred by the medical practice.

Question 8

The final section of the statement of cash flows reconciles cash to the ____.

Accepted Answer

The final section of the statement of cash flows reconciles cash to the balance sheet, showing the changes in cash and cash equivalents from the beginning to the end of the period, and linking it to the cash and cash equivalents reported on the balance sheet.

Question 9

Bank reconciliation refers to the process of regaining good credit after missing payments on a bank loan.

Accepted Answer

Bank reconciliation is the process of comparing and matching figures from the accounting records against those presented on a bank statement to ensure they are in agreement and to identify any discrepancies.

Question 10

To reduce the risk of theft by an employee, a business should have one employee who receives the cash for the cash drawer, accepts cash payments and makes change, and performs the cash drawer balancing at the end of the day

Accepted Answer

Having a single employee handle all cash-related tasks increases the risk of theft because it lacks checks and balances. Separating these duties among different employees can help prevent theft by creating a system of internal controls.

Question 11

The statement of cash flows is an example of managerial accounting.

Accepted Answer

The statement of cash flows is a financial accounting report, designed for external users like investors and creditors, not specifically for managerial decision-making purposes.

Question 12

A plumber fixes a leaky pipe in a medical practice late at night on September 23rd. He mails an invoice for services rendered to the medical practice that is received on September 29th and is due by October 14th. A check is written to pay the invoice on October 2nd. Under accrual accounting, what should be the posting date for the repair expense?

Accepted Answer

Under accrual accounting, expenses are recognized when they are incurred, not when they are paid. Therefore, the repair expense should be posted on September 23rd, the date the service was provided.

Question 13

The final statement or "bottom line" of an annual statement of cash flows is the end of year ____.

Accepted Answer

The bottom line of an annual statement of cash flows shows the end-of-year cash and cash equivalents, reflecting the company's liquidity position at the end of the period.

Question 14

A new government regulation decreases the time that a bank can hold a check before clearing it. This shortens the average float by two days. Under which circumstance will this cause a loss of revenue for a healthcare business?

Accepted Answer

When a healthcare business writes checks from an account that pays interest, shortening the average float by two days means that funds will leave the account sooner. This results in less interest being earned on the account balances, leading to a loss of revenue for the business.

Question 15

Some businesses will accept only customer payments made by credit cards or debit cards despite having to pay service fees for each transaction. Which of the following is the best reason for not accepting cash payments?

Accepted Answer

Handling cash involves costs related to counting, storing, and depositing, which can outweigh the fees associated with card transactions.

Question 16

When a bank statement for the operating checking account of a medical practice does not include a check to a vendor mailed three weeks earlier, someone at the medical practice should ____.

Accepted Answer

Contacting the vendor to inquire about the receipt of the check is the most direct and effective first step to understand the situation. It helps to confirm whether the check was received and possibly lost or delayed after receipt, or if it never arrived, guiding the next steps to resolve the issue.

Question 17

After completing the bank reconciliation, a journal entry is prepared to increase the cash balance in the accounting records for which of the following?

Accepted Answer

Interest received increases the cash balance in the accounting records because it represents additional funds credited to the company's bank account that have not yet been recorded in the company's books.

Question 18

Which of the following is true about the statement of cash flows?

Accepted Answer

The statement of cash flows is a required financial statement under generally accepted accounting principles (GAAP).

Question 19

Credit card companies charge merchants and businesses a fee each time a customer pays by credit card.

Accepted Answer

Credit card companies charge merchants a fee, known as the interchange fee, for processing credit card transactions. This fee typically ranges from 1% to 3% of the transaction amount.

Question 20

Who is held accountable for the accuracy of a medical office's petty cash fund?

Accepted Answer

The petty cash custodian is directly responsible for managing and maintaining the accuracy of a medical office's petty cash fund. This includes keeping track of all disbursements and ensuring the fund is balanced.

Quiz 9: Cash Management