Chapter Eighteen Test Bank Multiple Choice Questions

1. A county hospitals patient charges for the year were $3,000,000. Of this amount,
25% is eeme to !e uncollecti!le, 5% was consiere to !e charity ser"ices after
the ser"ices were pro"ie, an 10% will !e reuce !y contractual a#ustments
with thir party pro"iers. $ow much will !e reporte as e%pense in the e%ternal
financial statements&
a. $0
!. $'50,000
c. $150,000
. $300,000
e. $1,200,000
2. (or e%ternal financial reporting purposes, charity ser"ices are not reporte as
a. e%penses.
!. re"enues.
c. euctions to re"enues.
. )one of the a!o"e.
e. All of the above.
3. *hich of the following statements a!out ser"ices contri!ute to a go"ernment
hospital is true&
a. +o"ernment hospitals may report contri!ute ser"ices as operating
re"enues.
!. Government hospitals are permitte! but not re"uire! to recogni#e
contribute services! regarless of the material value of the services.
c. +o"ernment hospitals are re,uire to report contri!ute ser"ices at their
fair mar-et "alue.
. )one of the a!o"e are true.
e. .oth items a an c are true.
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6. *el!y 7ounty $ospital entere into a capital lease to purchase a new 893
machine. :he capitali;a!le cost of the e,uipment was $600,000 an the hospital
mae a $60,000 own payment. :he entry re,uire when the asset was ac,uire
was
r cr
a. 2,uipment $600,000
Other (inancing <ources = 7apital >ease $3?0,000
7ash 60,000
!. 2%penitures $600,000
Other (inancing <ources 5 7apital >ease $3?0,000
7ash 60,000
c. 2,uipment $3?0,000
2%peniture 60,000
>ease 1aya!le $3?0,000
7ash 60,000
. E"uipment $$00!000
%ease &a'able $()0!000
Cash $0!000
e. 2,uipment $600,000
>ease 1aya!le $600,000
5. 7ounty +eneral $ospital estimates uncollecti!le accounts to !e $112,000 an
contractual a#ustments to !e $'0,000. :he entry neee to recor these estimates
woul !e
r cr
a. 2%penses $101,000
Allowance for @ou!tful Accounts $101,000
!. 2%penses $112,000
9e"enue @euctions = 7ontractual A#ustments '0,000
Allowance for @ou!tful Accounts $112,000
Allowance for 7ontractual A#ustments '0,000
c. 9e"enue @euctions = Ancollecti!le Accounts $112,000
2%penses '0,000
Allowance for @ou!tful Accounts $112,000
Allowance for 7ontractual A#ustments '0,000
. *evenue +euctions , -ncollectible Accounts $../!000
*evenue +euctions , Contractual A0ustments 12!000
Allo3ance for +oubtful Accounts $../!000
Allo3ance for Contractual A0ustments 12!000
e. 9e"enue @euctions = Ancollecti!le Accounts $112,000
9e"enue @euctions = 7ontractual A#ustments '0,000
Accounts 9ecei"a!le $101,000
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?. 3f a go"ernment hospital gets unrestricte onations that are not a part of a
hospitals ma#or ongoing operations, those onations are classifie on the
statement of re"enues, e%penses, an changes in net assets as
a. an operating re"enue.
!. an operating gain.
c. an other financing source.
. a nonoperating gain.
e. a nonoperating re"enue.
'. $ospital e,uipment that originally cost $150,000 was sol for $?0,000. :he net
!oo- "alue of the e,uipment at the ate of sale was $'5,000. :he hospital shoul
report
a. an operating loss of $15,000.
b. a nonoperating loss of $.4!000.
c. e%penses of $'5,000.
. other financing sources of $?0,000.
e. .oth items c an .
4. At their recent !oar of irectors meeting, the 7ounty $ospital .oar "ote to
esignate $150,000 of current in"estments towar the reno"ation of the hospital
planne for ne%t year. :his esignation will !e result in
a. a creit to cash.
!. a e!it to unrestricte in"estments.
c. a ebit to investments5esignate for plant replacement.
. a e!it to construction in progress.
e. a e!it to prepai asset.
0. :he fair mar-et "alue of a go"ernment hospitals in"estments that are restricte
for future capital nees increase !y $',000. As of the en of the fiscal year,
a. nonoperating gains 3ill increase b' $1!000.
!. general re"enue will increase !y $',000.
c. this change in mar-et "alue will not !e reporte unless the assets are sol.
. other financing sources will increase !y $',000.
e. )one of the a!o"e.
10. 7ounty 8eical 7enter recei"e unrestricte contri!utions of $22,000. :he
hospital use the contri!utions to support general ser"ices. :hese contri!utions
woul !e reporte on the statement of cash flows as
a. operating acti"ities.
b. noncapital financing activities.
c. capital an relate financing acti"ities.
. in"esting acti"ities.
e. )one of the a!o"e. +o"ernment hospitals o not report a statement of
cash flows.
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11. A go"ernment hospital woul not report which category of net assetsB
a. 6pecific purpose net assets
!. Anrestricte net assets
c. 9estricte net assets
. 3n"este in capital assets, net of relate e!t.
12. 9estricte assets of a go"ernment hospital are use to account for resources
a. *estricte b' onors or grantors.
!. 9estricte !y !on an other contracts.
c. 9estricte !y the hospital !oar of irectors.
. All of the a!o"e.
13. A nongo"ernment not5for5profit hospital can report net assets in all the following
categories except
a. unrestricte net assets.
!. temporarily restricte net assets.
c. permanently restricte net assets.
. investe in capital assets! net of relate ebt.
16. A go"ernment hospital !oar of irectors "ote to set asie $3,000,000 of
in"estments for future hospital e%pansion. 3n the hospital !alance sheet, these
resources shoul !e reporte
a. -nrestricte net assets
!. 9estricte net assets
c. 3n"este in capital assets, net of relate e!t
. 1ermanently restricte net assets
15. *hich of the following statements of a go"ernment hospital is not re,uire&
a. <tatement of cash flows
!. .alance sheet
c. <tatement of re"enues, e%penses an changes in net assets
. 6tatement of changes in fun balances
1?. A go"ernment hospital recei"e a cash onation restricte for construction of a
new wing to the hospital. $ow shoul the onation !e reporte !e reporte in the
statement of cash flows&
a. 7ash inflows from operating acti"ities
!. 7ash inflows from noncapital financing acti"ities
c. Cash inflo3s from capital an relate financing activities
. 7ash inflows from in"esting acti"ities
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1'. 1atient ser"ice re"enues of a go"ernment hospital shoul !e reporte in the
statement of re"enues, e%penses, an changes in net assets
a. At the stanar rates charge for the ser"ice regarless of !a e!ts,
contractual a#ustments, policy iscounts, etc.
b. 7et of ba ebts! contractual a0ustments! polic' iscounts! charit'
services.
c. )et of contractual a#ustments, policy iscounts, charity ser"ices, !ut not
net of !a e!ts.
. )et of !a e!ts, contractual a#ustments, policy iscounts, etc., !ut not
net of charity ser"ices.
14. A go"ernment hospital woul not report which of the following as operating
income&
a. 1remium fee.
b. -nrestricte onations.
c. @onations restricte for a specific operating purpose.
. All of the a!o"e are operating income.
10. 1remium fee re"enues shoul !e recogni;e asB
a. 9e"enue in the perio the premium was recei"e.
b. *evenue in the perio covere b' the premium.
c. As eferre re"enue until the ser"ices are actually pro"ie.
. As re"enue only if ser"ices with stanar charges e,ual to or greater than
the premium for the perio are pro"ie in the perio.
20. 3n the statement of re"enues, e%penses an changes in net assets, e%penses of
go"ernment hospitals shoul !e reporte !yB
a. )atural classifications.
!. @epartment.
c. (unction.
. Either b' natural classification or b' function
21. *hich item is reporte significantly ifferently !y go"ernment hospitals than !y
nongo"ernment, not5for5profit hospitals&
a. 1atient ser"ice re"enues
b. 7et assets
c. Assets limite as to use
. 7harity ser"ices
22. *hich of the following items are reporte in much the same manner !y
go"ernment hospitals an nongo"ernment not5for5profit hospitals&
a. 1atient ser"ice re"enues
!. 7harity ser"ices
c. 1remium fee re"enues
. 7afeteria sales
e. All of the above
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23. @u!lin <tate $ospital woul ha"e earne $3,000,000 of patient ser"ice re"enue
uner its esta!lishe rate structure for the year. $owe"er, it oes not e%pect to
collect this amount ue to charity allowances of $'5,000, iscounts to thir5party
payers of $200,000, an an estimate uncollecti!le amount of $50,000. (or the
year, how much shoul @u!lin <tate $ospital report as patient ser"ice re"enue&
a. $3,000,000
!. $2,400,000
c. $2,'25,000
. $/!)14!000
26. A nongo"ernment not5for5profit hospital presents all of the following financial
statements, except
a. a !alance sheet.
!. a statement of operations.
c. a statement of activities.
. a statement of changes in net assets.
e. a statement of cash flows.
25. A nongo"ernment not5for5profit hospital presents the following categories on its
statement of cash flows, except
a. cash flows from operating acti"ities.
!. cash flows from in"esting acti"ities.
c. cash flo3s from noncapital financing activities.
. cash flows from financing acti"ities.
2?. <ources of generally accepte accounting principles for go"ernment hospitals
inclue
a. A371A auit an accounting guie, Health Care Organizations.
!. +A<. pronouncements.
c. (A<. not5for5profit stanars.
. All of the a!o"e.
e. Both a an b.
2'. :he measurement focus use !y go"ernmental hospitals is
a. the cash measurement focus.
!. the current financial resources measurement focus.
c. the economic resources measurement focus.
. )one of the a!o"e.
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