Question 1. Which of the following statements about healthcare providers is incorrect?
a. Traditional outpatient settings include clinics, medical practices, hospital outpatient departments, and emergency rooms.
b. Long-term care includes both healthcare and personal care services.
c. There are many more hospitals than there are nursing homes, but nursing homes tend to have a greater number of beds.
d. One of the hypothesized benefits of integrated delivery systems is patient capture.
e. Patients with chronic illnesses are best treated by a single case manager regardless of the provider setting.
Question 2 Assume that John Richards pays income taxes at a 30 percent rate. He currently owns a not-for-profit (municipal) bond that pays 5 percent interest. What interest rate would have to be set on a for-profit (corporate) bond to produce the same amount of usable (after-tax) income?
a. 5.0%
b. 5.7%
c. 6.6%
d. 7.1%
e. 8.4%
Question 3. Businesses hold short-term securities for which of the following reasons?
a. As a substitute for cash
b. As a temporary repository for cash being accumulated for a specific purpose
c. As a buffer against bad debt losses.
d. Both a. and b. above
e. a., b., and c. above
Question 4.From a provider's perspective, which of the following third-party payment methods has utilization risk?
a. Charge based
b. Capitation
c. Per diem
d. Diagnosis (DRG) based
e. Cost based
Question 5. The following profit information was taken from Eastside Hospital's budget data: Simple budget$1,200,000 Flexible budget$1,000,000 Actual results$ 500,000 What is the simple profit variance? (Hint: An unfavorable variance is identified by a minus sign.)
a. -$200,000
b. -$500,000
c. -$700,000
d. $500,000
e. $700,000
Question 6. Which of the following statements about the income statement is most correct?
a. It has several alternative names, including the statement of liabilities.
b. It reports the financial status of an organization as of a single point in time.
c. It reports the economic profitability of an organization.
d. Its three major sections are operating costs, nonoperating costs, and total (net) costs.
e. Income statements are always prepared annually, but never for shorter periods (for example, quarterly).
Question 7. Which of the following statements about the tradeoff theory of capital structure is most correct?
a. The trade-off theory can be used to set a precise optimal structure for any given business.
b. The trade-off theory tells us that businesses should use almost 100 percent debt financing.
c. The trade-off theory tells us that businesses should use almost no debt financing.
d. The trade-off theory tells us that businesses should use some debt financing, but not too much.
e. The trade-off theory has no applicability at all to not-for-profit businesses.
Question 8. Which of the following statements concerning net income versus cash flow is most correct?
a. Net income is a rough measure of a business's cash flow.
b. Net income can be converted into a rough measure of cash flow by adding noncash expenses, typically depreciation.
c. Net income can be converted into a rough measure of cash flow by adding nonoperating income.
d. Net income can be converted into a rough measure of cash flow by adding the provision for bad debts.
e. None of the above statements are correct.
Question 9.True or False:
The set of rules and regulations that govern the content and format of financial statements is called Government Acceptable Procedures (GAP).
Question 10. True or False:
To minimize the risk associated with debt financing, permanent assets (land, buildings, and equipment) should be financed with long-term debt while temporary assets (such as a seasonal buildup in inventories) should be financed with short-term debt.