Quiz 18: Accounting for Health Care Entities
1. The required statements for a government hospital are: • Statement of Net Position • Statement of Revenues, Expenses, and Changes in Net Position • Statement of Cash Flows 2. Although there are many similarities among the financial statements for a government hospital and a not-for-profit hospital, the key differences are: • Net assets for not-for-profit hospitals are classified as net assets without donor restrictions and net assets with donor restrictions. Net position for government hospitals are classified as unrestricted, restricted, and net investment in capital assets. • Not-for-profit hospitals report a statement of operations and a statement of changes in net assets. Government hospitals report a statement of revenues, expenses, and changes in net position. • Not-for-profit hospitals report changes in both categories of net assets separately. Government hospitals report only changes in total net position. • Not-for-profit hospitals report net assets released from restrictions. Government hospitals do not report net assets released from restrictions. • Not-for-profit hospitals follow FASB cash flow statement guidance (three sections). Not-for-profit hospitals may prepare the statement using either the indirect method or the direct method. Government hospitals follow GASB cash flow statement guidance (four sections). Government hospitals must prepare the statement using the direct method. • Government hospitals defer revenue recognition on reimbursement grants until qualifying costs are incurred. Nongovernment, not-for-profit hospitals do not.
*Calculations: Patient service charges ($18,000) less charity service ($500) less contractual adjustments ($1,100) less uncollectible accounts ($710). **Calculations: Net investment in capital assets, January 1 ($15,000) plus Restricted net position, January 1 ($3,200) plus Unrestricted net position, January 1 ($9,000).