Question 1

Both public and private sector health care organizations measure transactions and events similarly,but use different equity accounts.

Accepted Answer

Both public and private sector health care organizations use similar transaction and event measurements, but may have different equity accounts based on their respective ownership structures.

Question 2

Because they are engaged in business-type activities,governmental health care organizations typically use the accrual basis and economic resources measurement focus.

Accepted Answer

Governmental health care organizations are considered part of the public sector and are required to follow the Generally Accepted Accounting Principles (GAAP) guidelines for governmental entities. This includes using the accrual basis of accounting and economic resources measurement focus.

Question 3

Private for-profit health care organizations follow FASB standards excluding those written specifically for not-for-profits.

Accepted Answer

Private for-profit health care organizations are considered business entities and therefore follow the Financial Accounting Standards Board (FASB) standards, which are designed for business entities. They do not follow the Generally Accepted Accounting Principles (GAAP) standards written specifically for not-for-profit organizations.

Question 4

For accounting purposes,health care organizations include HMOs and individual medical practitioners,as well as hospitals.

Accepted Answer

Health care organizations include various types of providers, such as HMOs, medical practitioners, and hospitals, all of which require accounting processes and financial reporting.

Question 5

Like charities and private colleges,private not-for-profit health care organizations follow FASB standards.

Accepted Answer

Private not-for-profit health care organizations are required to follow Financial Accounting Standards Board (FASB) standards, just like charities and private colleges.

Question 6

Not-for-profit business-oriented organizations use modified accrual accounting.

Accepted Answer

Not-for-profit organizations typically use full accrual accounting, while modified accrual accounting is used by governmental entities.

Question 7

The AICPA Audit and Accounting Guide:
 Health Care Organizations applies equally to private not-for-profit and investor-owned but not governmentally owned health care organizations.

Accepted Answer

The answer of The AICPA Audit and Accounting Guide:
 Health...

Question 8

Government-owned health care organizations do not report depreciation expense.

Accepted Answer

Health care organizations owned or controlled by a government is typically considered a special purpose entity engaged only in business-type activities. These organizations use proprietary fund accounting which uses use the accrual basis and economic resources measurement focus.

Question 9

The AICPA Health Care Guide applies to investor-owned,private not-for-profit,and government-owned hospitals.

Accepted Answer

The AICPA Health Care Guide applies to all three types of hospitals - investor-owned, private not-for-profit, and government-owned.

Question 10

As both the FASB and the GASB approved the AICPA Health Care Guide,its requirements constitute Category A GAAP and must be followed by all health care organizations.

Accepted Answer

The statement is incorrect. The AICPA Health Care Guide is not approved by either the FASB or the GASB, and therefore does not constitute Category A GAAP. The guide is considered a best practice resource and its recommendations are not mandatory for all health care organizations to follow.

Question 11

The AICPA Health Care Guide provides additional guidance regarding accounting and reporting requirements for voluntary health and welfare organizations.

Accepted Answer

The Health Care Guide must be followed by all health care organizations.

Question 12

If a health care organization is owned or controlled by a government,it is typically considered a special-purpose entity engaged only in business-type activities and would use governmental fund accounting.

Accepted Answer

Government-owned health care organizations typically use enterprise fund accounting, which is used for business-type activities, rather than governmental fund accounting.

Question 13

Both governmental owned and private health care providers use the accrual basis of accounting and the economic resources measurement focus.

Accepted Answer

Both governmental owned and private health care providers follow the same accounting standards and therefore use the accrual basis of accounting and the economic resources measurement focus.

Question 14

Private-sector health care organizations use the three-category FASB format for the Statement of Cash flows,while public sector organizations use the four-category GASB format

Accepted Answer

This statement is true. Private-sector health care organizations use the Financial Accounting Standards Board (FASB) three-category format for their Statement of Cash Flows, while public-sector health care organizations use the Governmental Accounting Standards Board (GASB) four-category format.

Question 15

Both commercial and not-for-profit hospitals in the private sector follow FASB standards.

Accepted Answer

Both commercial and not-for-profit hospitals in the private sector are required to follow Financial Accounting Standards Board (FASB) standards for financial reporting purposes.

Question 16

The AICPA Health Care Guide provides accounting and reporting requirements that override GASB and FASB standards,but apply only to health care providers.

Accepted Answer

The AICPA Health Care Guide provides certain additional accounting and reporting requirements beyond those required by the FASB and the GASB standards. As both the FASB and the GASB approved the Health Care Guide, its requirements constitute Category B GAAP and must be followed by all health care organizations.

Question 17

Government owned hospitals follow FASB Statements 116 and 117.

Accepted Answer

FASB Statements 116 and 117 are accounting standards for nonprofits and are not applicable to government entities. Government hospitals follow different accounting standards and reporting requirements.

Question 18

Private health care organizations,both not-for-profit and for-profit,follow FASB standards while government healthcare organizations follow GASB.

Accepted Answer

Private health care organizations, both not-for-profit and for-profit, are considered nongovernmental entities and therefore follow the Generally Accepted Accounting Principles (GAAP) established by the Financial Accounting Standards Board (FASB). Government healthcare organizations, on the other hand, are considered governmental entities and follow the GAAP established by the Governmental Accounting Standards Board (GASB).

Question 19

Government hospitals are typically considered special purpose entities engaged in business-type activities under GASB Statement 34.

Accepted Answer

Government hospitals are typically considered special purpose entities engaged in business-type activities under GASB Statement 34, which provides guidance on financial reporting for state and local governments. This means that government hospitals are expected to report their financial information in a way that reflects their operational activities, including revenue and expenses related to providing healthcare services to patients.

Question 20

Both commercial and private sector not-for-profit hospitals and health care providers follow FASB Statements 116 and 117.

Accepted Answer