Financial Aspect of Health care system assignment. Please read carefully and make sure you understand what needs to be done.

HSA 304 Fall 2020 Name: __________________

Professor

Mid-Term Exam

1. What is the accrual basis of accounting? CH10 (3)

1. Revenue is recorded when it is earned.

2. Transaction is not recorded until received or paid out.

3. A calculation of debts owed.

4. None of the above.

1. Which of the following is NOT a basic financial statement? CH10 (3)

1. Balance Sheet

2. Statement of Cash Flows

3. Statement of Accrued Benefits

4. Statement of Revenue & Expense

1. Match the ratio with its type of ratio. CH11 (4)

1. Profitability Quick Ratio

2. Solvency Operating Margin

3. Liquidity Debt Service Coverage Ratio

Assumptions: CH11 (5)

• Current Assets = $500,000

• Current Liabilities = $250,000

What is the Current Ratio?

1. 1 to 1

2. 2 to 1

3. 3 to 1

4. 4 to 1

1. Assumptions: CH11 (5)

• Cash and Cash Equivalents = $ 165,000

• Operating Expenses = $ 225,000

• Number of Days in the period = 31

What is the Days Cash on Hand?

1. 22.73

2. 46.01

3. 17.65

4. 75.25

1. Common Sizing involves which of the following? CH13 (4)

1. Comparative Analysis

2. Converting dollar amounts to percentages

3. Staffing

4. Time Conversion

1. Common Sizing is also known as: CH13 (4)

1. Forecasting

2. Capacity Level

3. Patient Mix

4. Vertical Analysis

1. The process of Trend Analysis compares? CH13 (4)

1. Expenses and revenue

2. Figures over several time periods

3. Balance Sheet

4. Uncontrollable Costs

1. Trend Analysis is sometimes called? CH13 (4)

1. Cost Shifting

2. Expense Sizing

3. Horizontal Analysis

4. Vertical Analysis

1. Is the following statement true or false? CH13 (4)

“To forecast is to calculate or predict some future event

Or condition, usually as a result of study analysis of

Available pertinent data”

1. True B. False

1. Perform Common Sizing for the two Nursing Homes below. (8)

CH13

Nursing Home A Nursing Home B

Current Assets $3,000,000 _____ $6,000,000 _______

Property, Plant & Equipment $12,500,000 _____ $35,000,000 _______

Other Assets $ 1,000,000 _____ $ 3,000,000_______

Total Assets $16,500,000 _____ $44,000,000_______

1. What are the three criteria for true comparability? CH14 (5)

1. Consistency, verification, unit measurement

2. LIFO, FIFO, weighted average

3. Revenue, expense, short term assets

4. None of the Above

1. Operating Budgets generally deal with? CH15 (4)

1. Actual short term revenues and expenses.

2. Covers a period of 12 months.

3. Provide a useful tool for the control of costs.

4. All of the above

1. Capital Expenditure budget may cover an extended period of time. (4)

CH16

1. True B. False

1. A hospital is trying to determine the payback period for a piece of X-Ray equipment it is purchasing. The assumptions are: CH12 (15)

• Purchase price of equipment = $350,000.

• Useful life of the equipment = 10 years.

• Revenue the machine will generate per year = $10,000.

• Direct operating costs associated with earning revenue = $75,000

• Depreciation expense per year = $15,000.

1. Find the machine’s expected net income

2. Find the annual cash inflow the machine is expected to generate

3. Compute the payback period

COMPLETE THIS QUESTION ON THE EXCEL WORKSHEET PROVIDED

1. What are the reasons for new asset spending? CH16 (4)

1. New equipment or space to comply with federal or state requirements

2. New equipment to improve productivity

3. Creation of a new facility, department or program

4. Expansion of capacity in a department or program

5. All of the above

1. Which of the following is Cash Flow Reporting Method? CH16 (4)

1. Accounting Rate of Return

2. Monetary Unit

3. Inflation Method

4. Weighted Average

1. Acquiring capital assets for future use is one type of Capital Expenditure Proposal. CH16 (4)

1. True B. False

1. Given the following assumptions, compute the Unadjusted Rate of Return using BOTH the original investment amount and the average investment amount. CH 12 (8)

• Average Annual Net Income is $ 200,000

• Original Investment Amount is $ 1,000,000

• Unrecovered Asset Cost at the end

Of the useful life = $ 100,000

COMPLETE THIS QUESTION ON THE EXCEL WORKSHEET PROVIDED

1. Is the following statement True or False? CH 14 (4)

“If an organization is budgeting with workload standards, the Static

Budget projects expenses at a single normative level of

workload activity, whereas the flexible budget projects expenses at

various levels of workload activity.”

1. True B. False