Question 1

Which of the following is NOT TRUE with respect to governmental health care entities?

Accepted Answer

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 proprietary fund accounting and follow GASB. Governmental health care organizations typically use the accrual basis and economic resources measurement focus because they are engaged in business-type activities.

Question 2

Record the following transactions on the books of St. Marie's Hospital, a private not-for-profit hospital.
a) The Hospital billed patients $612,000 for services rendered. Of this amount, 5% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $87,000.
b) The Hospital received $750,000 in pledges of support in a campaign undertaken to purchase new MRI equipment. All of the pledges are payable within one year and 8% are expected to be uncollectible.
c) Charity care in the amount of $36,000 at standard charges) was performed on an indigent patient.
d) The Hospital collected $487,200 for the services performed in 1) above. Actual contractual adjustments for these services amounted to $89,700. $ 13,700 of receivables were identified as uncollectible and written off.

Accepted Answer

The answer of Record the following transactions on the books...

Question 3

Which of the following is accurate with respect to accounting for an investor-owned, for-profit hospital?

Accepted Answer

Private not-for-profit health care organizations follow FASB standards, including those specifically applicable to not-for-profits 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; to private not-for-profit, governmentally owned and investor-owned health care organizations.

Question 4

St. David's Hospital, a not-for-profit business oriented hospital, had contributions totaling $14,000,000 as follows: $2,000,000 for unrestricted purposes for the following year and beyond; $6,000,000 for construction of a new surgery wing which is scheduled to be built in the following year, $5,000,000 pledged for endowment purposes and $1,000,000 restricted for purposes other than long term asset acquisition. The endowment was a pledge; all other contributions were received in cash.
What is the hospital's journal entry?

Accepted Answer

The answer of St. David's Hospital, a not-for-profit business oriented...

Question 5

Answer the following questions:
a) Other than a Statement of Financial Position i.e. 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?

Accepted Answer

The answer of Answer the following questions:
a) Other than a...

Question 6

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

Accepted Answer

The answer of Identify income items which should not be...

Question 7

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

Accepted Answer

The answer of What is the basis of accounting for...

Question 8

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

Accepted Answer

The answer of Assume you are reviewing the financial statements...

Question 9

The Audit and Accounting Guide identifies items that should not be included in the determination of operating income for a health care organization. Which of the following is not one of those items?

Accepted Answer

While the receipt of unrestricted contributions is not included in the calculation of operating income, it is not one of the items identified in the Audit and Accounting Guide. The Audit and Accounting Guide identifies the following items that should not be included in the determination of operating income: 1) transaction with the owners, other than in exchange for services, 2) transfers among affiliated organizations, 3) Receipt of temporarily or permanently restricted contributions, 4) items identified by FASB standards as elements of other comprehensive income, 5) items requiring separate display and 6) unrealized gains and losses on investments other than those classified as trading securities.

Question 10

It is the policy of St. David's Hospital, a not-for-profit business oriented hospital, is to record all gifts, bequests, and investment income as Nonoperating Income. Nonoperating revenues related to undesignated resources amounted during the year is as follows: 25,000 in unrestricted gifts and bequests, $18,000 in unrestricted income on endowment investments and $3,800 from income on investments other than endowment.
What is the correct journal entry to record this event?

Accepted Answer

The answer of It is the policy of St. David's...

Question 11

St. David's Hospital, a private not-for-profit, began the year 2017 with the following trial balance:
  
Transactions for 2017 are as follows:
a) Collected $340,000 of the Patient Accounts Receivable that was outstanding at 12-31-2016. Actual contractual adjustments on these receivables totaled $152,000.
b) The Hospital billed patients $2,350,000 for services rendered. Of this amount, 7% is expected to be uncollectible. Contractual adjustments with insurance companies are expected to total $792,000. Hint: use an allowance account to reduce accounts receivable for estimated contractual adjustments). The Hospital collected $1,235,000 of the amount billed to patients
c) In 2016 the Hospital had received a contribution of $240,000 to purchase new ultrasound equipment. The equipment was purchased for $300,000 in 2017.
d) Charity care in the amount of $60,000 at standard charges) was performed for indigent patients.
e) The Hospital received $700,000 in securities to establish a permanent endowment. Income from the endowment is unrestricted.
f) Other revenues collected in cash were: gift shop $11,000 and cafeteria $34,000.
g) The Hospital received in cash unrestricted interest income on endowments of $5,000. Unrealized gains on endowment investments totaled $7,000.
h) Expenses amounting to $1,160,000 for Professional Care of Patients, $340,000 for General Services, and $219,000 for Administration were paid in cash.
i) Depreciation on fixed assets, including the ultrasound equipment, totaled $125,000 for the year. $90,000 for Professional Care of Patients, $18,000 for General Services, and $16,000 for Administration.)
j) Closing entries were prepared.
Required:
A. Record the transactions described above.
B. Prepare in good form, a Statement of Operations for the year ended December 31, 2017
C. Prepare in good form, a Statement of Changes in Net Assets for the year ended December 31, 2017.

Accepted Answer

The answer of St. David's Hospital, a private not-for-profit, began...

Question 12

St. Paul's is a private not-for-profit hospital. At the end of December 2016, a donor pledged to make five payments of $50,000, beginning on January 1, 2017. The contributions are restricted to pay for operations in those years. The present value of these payments is $223,255, discounted at 6%. The contribution was not restricted as to purpose. Record all entries required for 2016 and 2017.

Accepted Answer

The answer of St. Paul's is a private not-for-profit hospital....

Question 13

Which of the following organizations must follow GASB standards?

Accepted Answer

Private not-for-profit health care organizations follow FASB standards, including those specifically applicable to not-for-profits. Private for-profit health care organizations follow FASB standards excluding those written specifically for-not-for profits. 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 proprietary fund accounting and follow GASB.

Question 14

Investment income related to Assets Whose Use Is Limited amounted to $15,000 for St, Mary's Hospital, is a not-for-profit business oriented hospital. The hospital's board designated the money for future capital improvements. What is the journal entry to record this event?

Accepted Answer

The answer of Investment income related to Assets Whose Use...

Question 15

Identify the three types of temporary restrictions placed on contributions to a private sector not-for-profit health care organization and outline the accounting requirements for each type.

Accepted Answer

The answer of Identify the three types of temporary restrictions...

Question 16

The Health Care Guide makes a distinction between a health care organization and a voluntary welfare organization. Which of the following is accurate?

Accepted Answer

If essentially all revenues from services provided to patients or clients they are a health care organization subject to the Health Care Guide.

Question 17

St. Mary's Hospital is a not-for-profit business oriented hospital. During the year, premium revenue from capitation agreements amounted to $220,000, all of which was received in cash. Other Operating revenues, also collected in cash, are: $5,300 from the gift shop, $7,160 from parking lot fees, $3,700 from cafeteria operations and $29,300 from tuition. What is the appropriate journal entry to record this event? $\begin{array}{lrr}
\text { A) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Operating revenues-Unrestricted-Other Revenue } && 45,460 \
\text { B) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Operating revenues-Restricted-Other Revenue } && 45,460 \
\text { C) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Operating revenues-Unrestricted-Other Revenue } && 16,160 \
~~~\text { Operating revenues-Restricted-Other Revenue } && 29,300 \
\text { D) Cash } & 245,460 \
~~~\text { Operating revenues-Unrestricted-Premium Revenue } && 200,000 \
~~~\text { Non-Operating revenues-Unrestricted-Other Revenue } && 45,460
\end{array}$

Accepted Answer

The answer of St. Mary's Hospital is a not-for-profit business...

Question 18

While the different types of health care organizations follow different sets of generally accepted accounting standards, the differences lie mainly in presentation. Which of the following statements is accurate?

Accepted Answer

Investor-Owned Health Care Enterprises and Government Health Care Organizations must prepare a Statement of Cash Flows and Notes to the Financial Statements

Quiz 12: Accounting for Hospitals and Other Health Care Providers