Reporting HFMA TEST 6: Financial Research Study 1.

Purpose of Financial Reports - correct answer Purpose of Financial Reports The purpose of financial reports is to allow others to make determinations about the financial worthiness of an organization 3 key contributors of GAAP - correct answerThe SEC grants to FASB the authority to create GAAP. Other contributors to GAAP include The American Institute of Certified Public Accountants and other accounting organizations. Financial reports are governed by a variety of regulations, including those defined by: (Name 3) - correct answer Financial reports are governed by a variety of regulations, including those defined by: 1. The Securities and Exchange Commission (SEC). 2. The Financial Accounting Standards Board (FASB). 3. Generally Accepted Accounting Principles (GAAP). Purpose of Balance Sheet - correct answerThe statement of financial position/balance sheet summarizes the organization's assets, liabilities, and accumulated excesses from operations less any accumulated losses from operations or withdrawal Which types of restrictions of net assets are met either by the passage of time or by actions taken by the entity? 1. Unrestricted net assets 2.Temporarily restricted net assets 3. Permanently restricted net assets None of the above - correct answerTemporarily restricted net assets Purpose of Income Statement - correct answerPurpose of Income Statement This statement summarizes the organization's revenues and expenses and any excess or loss from the operations. It directly ties to the Statement of Financial Position or Balance Sheet. Which of the following should be reported in a statement of operations? Equity transfers Receipt of restricted contributions Operating results Contributions of long-lived assets - correct answerOperating results Accrual Accounting Method - correct answer1. Accural----- Revenue is recorded when it is charged to permit the revenue to be aligned with the expenses involved in delivering the service or product. It is used by healthcare organizations. Cash Accounting Method - correct answer2. Cash---- Revenue is recorded when payment is received. It may be used by departments within a healthcare organization, such as the cafeteria, gift shop, medical records, and release of information services. Fund Accounting Method - correct answerFund---- A record-keeping and control method to manage the categories of net assets to ensure compliance with the restrictions on those funds. 4 components of the Income Statement - correct answer4 components of the Income Statement 1. Gross patient service revenue 2. Net patient service revenue 3. Deductions from revenues 4.Premium Revenue Gross patient service revenue - correct answerGross Patient Service Revenue is recorded on an accrual basis and is reflected using the total charge even though the expected reimbursement is less than the charge. Revenues do not include charity care since charity care is never intended to result in cash flow. Net patient service revenue - correct answer--- Net Patient Service Revenue is the difference between Gross Patient Service Revenue and the contractual adjustments. Often the Statement of Operations or Income Statement will only reflect the Net Patient Service Revenue. The gross amount and contractual adjustment amount may appear in a footnote. Deductions from revenues - correct answerDeduction from Revenue------ Deductions from Revenue are amounts that are known will not be paid. They include any discounts extended to managed care companies or other payers. These discounts are known as contractual adjustments. Premium Revenue - correct answerPremium Revenue----- remium Revenue is generated as a result of an agreement to provide healthcare services rather than from the actual provision of services. What are agency Funds - correct answer4. Agency Funds--- Assets held for others. It is a type of asset found on balance sheet. For example, the hospital performs billing and collection services for its physicians. The funds it collects on their behalf are agency funds. Agency funds are included in unrestricted net assets. Transactions involving receipt and disbursement of agency funds are not included in the results of operations. Which of the following statements is NOT accurate? 1.Healthcare organizations may receive and hold assets owned by others under agency relationships. 2.Agency funds are not included in unrestricted net assets. 3. If the provider has concentrations of credit risk related to financial instruments, additional disclosure may be required.