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Exam 12: Accounting for Hospitals and Other Health Care Providers

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Question 41

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Which of the following is true regarding revenue recognition for health care organizations?

A) Patient service revenue is reported net of contractual adjustments
B) Patient service revenue includes an imputed charge for charity care
C) Both of the above
D) Neither of the above

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Question 42

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nOrganizations that are legally nonprofit and raise a significant amount of resources from voluntary contributions or grants are ___________.

A) Health care organizations
B) Voluntary health and welfare organizations
C) Subject to the Not-for-Profit Guide
D) Both B and C

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Question 43

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The equity section of the Statement of Net Assets of a private not-for-profit hospital may contain which of the following descriptions?

Patient service revenue for a hospital does not include charges for charity care.

The Audit and Accounting Guide identifies which of the following items that should NOT be included in the determination of the performance indicator?

Which of the following health care organizations have level "B" GAAP established by the AICPA's Audit and Accounting Guide: Health Care Organizations?

A "performance indicator" is required in the Statement of Operations for health care entities. Which of the following must be reported below that performance indicator?

Private health care organizations follow _____ standards while governmentally owned health care organizations follow _____ standards.

Government owned hospitals follow FASB Statements 116 and 117.

The AICPA Audit and Accounting Guide: Health Care Organizations applies to:

Which of the following is true regarding accounting and financial reporting for not-for-profit health care organizations?

St. John's is a private not-for-profit hospital. At the end of December 2008, a donor pledged to make five payments of $50,000 each, on January 1, 2009, 2010, 2011, 2012 and 2013 to pay for operations in those years. The present value of these payments is $210,618, discounted at 6%. The contribution was not restricted as to purpose. Record all entries required for 2008 and 2009.

Which of the following is true regarding the financial statements of a private sector nonprofit hospital?

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

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

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

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

Identify the three types of restrictions placed on temporarily restricted net assets of a private sector not-for-profit health care organization and outline the accounting requirements for each type.

Answer the following questions: (a) Other than a 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?

Charity care is reported as both revenue and expense (bad debt) in the Statement of Operations.