Question 1

Identify the three types of restrictions placed on temporarily restricted net assets of a private sector not-for-profit health care organization and outline the accounting requirements for each type.

Accepted Answer

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Question 2

St.Mark's is a private not-for-profit hospital.At the end of December 2011,a donor pledged to make five payments of $75,000 each,on January 1,2012,2013,2014,2015,and 2016 to pay for operations in those years.The present value of these payments is $334,883,discounted at 6%.The contribution was not restricted as to purpose.Record all entries required for 2011 and 2012.

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The answer of St.Mark's is a private not-for-profit hospital.At the...

Question 3

According to AICPA Health Care Guide which of the following shouldnot be include in the determination of a performance indicator for a health care organization?

Accepted Answer

According to the AICPA Health Care Guide, transfers among affiliated organizations and receipt of temporarily or permanently restricted contributions should be excluded from the determination of a performance indicator for a health care organization. All other factors, including revenues, expenses, patient volumes, and staffing levels, can be considered when determining performance indicators.

Question 4

Investor owned health care organizations have the following equity section accounts:

Accepted Answer

Investor-owned health care organizations have equity section accounts that include paid-in capital and retained earnings, which are typical for for-profit entities.

Question 5

When accounting for health care organizations,services provided for charity care are:

Accepted Answer

Services provided for charity care are not recorded as revenues as they are not expected to be paid for by the patient. However, the costs incurred in providing these services are still expensed as normal. This is in accordance with Generally Accepted Accounting Principles (GAAP) which require expenses to be recognized in the period in which they are incurred, regardless of whether or not revenue is generated. Therefore, option A is the correct answer.

Question 6

Which of the following are true with respect to health care organizations?

Accepted Answer

Private sector not-for-profits health care entities must disclose expenses by functional classifications. Expenses may be assigned to functional classifications such as patient care, support services, and general administration. Assets that have limited use may be permanently or temporarily restricted on the balance sheet, but expenses should not be reported according to natural classifications.

Question 7

Assume you are reviewing the financial statements of a not-for-profit hospital.Where would you find the account "Assets whose is limited" and how is it used?

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Question 8

Private not-for-profit health care organizations follow standards set by:

Accepted Answer

Private not-for-profit health care organizations follow standards set by the Financial Accounting Standards Board (FASB), which is responsible for establishing accounting and financial reporting standards for not-for-profit organizations. The Governmental Accounting Standards Board (GASB) sets standards for state and local governments, while the Securities and Exchange Commission (SEC) oversees the financial reporting of publicly traded companies. The American Institute of Certified Public Accountants (AICPA) provides guidance and support to the accounting profession, but does not set standards for not-for-profit health care organizations.

Question 9

What are the components of the equity section of the Balance Sheet of Statements of Net Assets,as appropriate for the following types of organizations?

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Question 10

What is the basis of accounting for hospitals and other health care organizations and what organizations are responsible for setting Level A GAAP?

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Question 11

Dukes Medical Center performed charity care at a cost of $5,000 and a standard charge of $11,000.How much should Dukes recognize as revenue?

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Question 12

Answer the following questions:
(a)Other than a balance sheet,what are the remaining financial statements required of private not-for-profit health care entities?
(b)What accounts appear in the equity section of the balance sheet of commercial hospitals,government owned hospitals,and private not-for-profit hospitals?

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(a)Other than a balance...

Question 13

If a clinic raises a significant amount or nearly all their resources from voluntary contributions or grants,then they are subject to the guidance in the:

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Question 14

Record the following transactions on the books of St.Marie's Hospital,a private not-for-profit hospital.
(a)The Hospital billed patients $300,000 for services rendered.Of this amount,3% is expected to be uncollectible.Contractual adjustments with insurance companies are expected to total $42,000.
(b)The Hospital received $240,000 in pledges of support in a campaign undertaken to purchase new MMR equipment.All of the pledges are payable within one year and 8% are expected to be uncollectible.
(c)Charity care in the amount of $34,000 (at standard charges)was performed on an indigent patient.
(d)The Hospital collected $237,600 for the services performed in (1)above.Actual contractual adjustments for these services amounted to $45,700.The remaining receivables were written off as uncollectible.

Accepted Answer

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Question 15

Health care organizations that are privately owned and operated to provide a return to investors follow which standards:

Accepted Answer

Private health care organizations are typically for-profit entities and therefore follow accounting standards set by the Financial Accounting Standards Board (FASB), excluding standards specifically created for not-for-profit organizations (which would not apply to for-profit health care organizations). The Governmental Accounting Standards Board (GASB) is focused on accounting standards for government entities and not applicable to private health care organizations.

Question 16

Identify income items which should not be included in the determination of the performance indicator by a hospital.

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Question 17

An unrestricted balance sheet category used in health care reporting to show limitations on the use of assets due to bond covenant restrictions and governing board plans for future use is called:

Accepted Answer

The category described in the question is assets whose use are limited, which indicates that the assets cannot be used freely due to restrictions imposed by bond covenants and plans of the governing board. Restricted net assets are those that have been restricted by external sources, such as donors or grantors, while temporarily restricted net assets are those that are restricted for a specific period, after which they become unrestricted. Unrestricted net assets are those that are free to be used by the organization without any restrictions. Hence, the best choice based on the given information is assets whose use are limited (Option A).

Question 18

During the month of December,Godiva Hospital billed patients $45,000,billed 3^rd parties $65,000,and provided $10,000 of charity care.How much should Godiva report as Accounts Receivable?

Accepted Answer

Accounts Receivable is the total amount billed to patients and third-party payers, excluding charity care. Therefore, the total Accounts Receivable would be $45,000 + $65,000 = $110,000. The charity care provided does not have to be paid back and should not be included in the calculation of Accounts Receivable.

Question 19

Contractual allowances for amounts billed to 3^rd parties are treated as:

Accepted Answer

Contractual allowances are a deduction from revenue and are treated as a contra-revenue. This means that they reduce the amount of revenue reported on the income statement.

Quiz 12: Accounting for Hospitals and Other Health Care Providers