Question 1

The amount of money received from a payer less the actual cost to provide the service represents the ____________________ gained by the transaction.

Accepted Answer

profit

Question 2

_____ ratios measure the ability of an organization to meet its short- and long-term obligations.

Accepted Answer

Liquidity ratios specifically measure the ability of an organization to meet its short- and long-term obligations, such as the current ratio and quick ratio. Accounts receivable ratios measure the efficiency of collecting payments from customers, while capitalization ratios measure the proportion of debt to equity. Turnover ratios measure how efficiently a company uses its assets to generate revenue.

Question 3

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-In addition, the Capital Expenditure Committee will examine the _______ to determine objectively whether the benefits to be received from the optical imaging system are the best alternative use of the organization's investment funds.

Accepted Answer

The Capital Expenditure Committee will examine the opportunity cost to determine objectively whether the benefits to be received from the optical imaging system are the best alternative use of the organization's investment funds. Opportunity cost refers to the benefits an organization misses out on when choosing one alternative over another.

Question 4

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-In the process of finalizing the operating budget, the health information manager was obligated to define the consequences if one or more of the department's programs had to be terminated (i.e., contracted transcription services, cancer registry, etc.). This implies the hospital is using which budget method?

Accepted Answer

The hospital is using the zero-based budget method, which requires managers to justify all budgeted expenses and activities, even those that have been in place in previous years. The health information manager is obligated to define the consequences of terminating a program, indicating that each program must be justified and evaluated on its own merits as if starting from zero.

Question 5

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-Before the Capital Evaluation Committee authorizes the acquisition of the proposed imaging system, it will also examine other capital evaluation measures. All the following are capital evaluation measures except

Accepted Answer

The operating margin ratio is not a capital evaluation measure, but rather a measure of a company's profitability. The other choices listed (accounting rate of return, net present value, and payback year) are all capital evaluation measures.

Question 6

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-The finance officer will calculate the _____ for the proposed imaging system to determine the cash flows for the project.

Accepted Answer

The finance officer will calculate the net present value (NPV) for the proposed imaging system to determine the cash flows for the project. NPV takes into account the initial investment, expected future cash flows, and the time value of money. By determining the NPV, the finance officer can evaluate the profitability of the project and whether it should be pursued.

Question 7

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-The monthly fee for leasing the van in the health information imaging service is considered a fixed cost.

Accepted Answer

The monthly fee for leasing the van is considered a fixed cost as it remains constant regardless of the number of offices served.

Question 8

One of the financial statements most useful to the director of Health Information Management is the ______________________________________________________.

Accepted Answer

The answer of One of the financial statements most useful...

Question 9

A discounting factor is required for determining which measure?

Accepted Answer

The discounting factor is required for calculating the net present value (NPV) of a project. NPV takes into account the time value of money and the discounting factor reflects the opportunity cost of investing in a project. A higher discount rate means less value being placed on future cash flows, while a lower discount rate means more value being placed on future cash flows. Therefore, the discounting factor is crucial in determining the profitability of a project.

Question 10

The predicted cost for two new full-time employees to operate the Health Information Imaging Service for physician offices would be included in the ____________________ budget.

Accepted Answer

The answer of The predicted cost for two new full-time...

Question 11

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-The Health Information Services department, with its added health information imaging service, will still be considered a nonpatient-revenue-generating department.

Accepted Answer

The optical imaging system and service are considered nonpatient-revenue-generating, as the department is not directly generating revenue from patient services but rather from renting space and services to physician offices.

Question 12

To analyze what has actually been expended compared with that which was budgeted can be determined from the ____________________ report.

Accepted Answer

The answer of To analyze what has actually been expended...

Question 13

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-The _____ officer (of the four employed by the institution) will most likely be responsible for obtaining the financing for the new imaging system and service, if it is necessary, including developing the investment report showing this new service.

Accepted Answer

The answer of Use the following information to answer the...

Question 14

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-Because the revenue from the approved imaging system will be significant, the Health Information Services department will now be considered an indirect cost department.

Accepted Answer

The Health Information Services department, despite generating significant revenue from the imaging system, would still be considered a direct cost department because it directly generates revenue through its services. Indirect costs are those costs that are not directly tied to a specific service or product but are necessary for the operation of the business, such as utilities or administrative salaries.

Question 15

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-In the process of calculating the net cash outflow, equipment depreciation was considered an outflow. Do you agree?

Accepted Answer

Depreciation is considered as an outflow because it reflects the cost of the asset over its useful life and reduces the value of the asset over time.

Question 16

In the process of preparing the various budgets, the proposed outlay for the optical imaging equipment would be included in the ____________________ budget.

Accepted Answer

The answer of In the process of preparing the various...

Question 17

During the planning process, the health information manager had no internal historical data (except for the number of physicians on the staff) available to predict the volume of outpatient clinic use it could accurately anticipate for an optical imaging service. Because of this, a ____________________ budget would not be possible for the first year of service.

Accepted Answer

The answer of During the planning process, the health information...

Question 18

The process of allocating the costs of indirect departments to direct departments can be accomplished by which method?

Accepted Answer

All of the methods listed (Step-down method, Double-distribution method, Simultaneous-equations method) are used for allocating the costs of indirect departments to direct departments. Each method has its own approach and complexity, but they all serve the purpose of cost allocation.

Question 19

Use the following information to answer the questions below.
In the process of long-range planning at Rocky Mountain Hospital, Health Information Services defined its future business opportunities.A commitment was made to an optical imaging system and service to be implemented at the first of the year.The system would have the capacity for serving physician offices through a space rental and service program in addition to meeting the needs of the department.It was estimated by the health information manager that the hardware and software components of the optical imaging system would cost approximately $100,000 (with an estimated useful life of 5 years), and a 3-year lease for one van (with a useful life of 5 years) would cost $7000 annually.The goal was to service 100 offices the first year, 200 offices the second year, and 300 offices the third and successive years at $150 a month.The accounting department uses straight-line depreciation; that is, equal amounts of depreciation expenses are recognized for each year the asset is assumed to be used.
-Because the proposed imaging system is competing with other departmental proposals for authorized funding, what capital evaluation measure, in particular, is expected to be analyzed before the hospital makes an objective decision?

Accepted Answer

Net present value is a capital evaluation measure that takes into account the time value of money. It is the difference between the present value of the future cash flows and the initial investment. In this case, the hospital is expected to analyze the net present value of the optical imaging system before making an objective decision.

Question 20

Which of the following is a performance measure?

Accepted Answer

Operating margin ratio is a performance measure as it indicates how efficiently a company is managing its operations and generating profit from its sales.

Quiz 18: Revenue Cycle and Financial Management