1. Which of the following statements about finance, accounting, and financial management is most correct?
a. Accounting is of no value in decision making.
b. Accounting provides the theory and concepts necessary to help managers make better decisions.
c. Financial management involves the measurement, in financial terms, of operational events that affect the resources and financing of an organization.
d. The primary role of finance is to plan for, acquire, and use resources to maximize the efficiency (and value) of the enterprise.
e. Financial management is of no value in decision making.
2. Which of the following are not finance activities?
a. Planning and budgeting
b. Revenue cycle management
c. Financial reporting
d. Financial risk management
e. Facilities management
3. Which of the following statements about the Medicare payment system for hospital inpatient care (IPPS) is most correct?
a. The basis for payment is the patient's diagnosis as specified by DRG.
b. The DRG payment is adjusted for severity.
c. Payments are increased for patients with very high costs (outliers).
d. Payments are adjusted for the hospital's local conditions (wage rates).
e. All of the above statements are correct.
4. Which of the following statements about the finance department at large healthcare organizations is most correct?
a. The department is headed by the chief financial officer (CFO) (sometimes called the vice-president finance).
b. The CFO typically reports directly to the chief executive officer (CEO).
c. The CFO usually is assisted by a comptroller and treasurer.
d. The comptroller and treasurer often have managers under them responsible for specific functions such as patient accounts management and cash management.
e. All of the above statements are correct.
5. Which of the following statements about investor-owned (for-profit) corporations is incorrect?
a. Investors become owners by purchasing shares of stock.
b. Owners have a claim on the business's residual earnings.
c. Owners exercise control by voting for the board of directors (the proxy mechanism).
d. When an individual sells his or her stock, the company receives the proceeds from the sale.
e. An investor (owner) cannot lose more than the amount of his or her investment.
6. Which of the following statements about activity based costing (ABC) is most correct?
a. It uses a top down approach to cost allocation.
b. It is most useful for assigning costs to departments.
c. It is most useful for assigning costs to individual services.
d. It is easy to apply because it ignores overhead costs.
e. It is less costly to implement than traditional costing methods.
7. Which of the following statements abouta flexible budget is most correct?
a. A flexible budget uses realized (actual) prices along with all other original (simple) budget assumptions.
b. A flexible budget uses realized (actual) labor costs along with all other original (simple) budget assumptions.
c. A flexible budget uses realized (actual) supplies costs along with all other original (simple) budget assumptions.
d. A flexible budget uses realized (actual) facilities costs along with all other original (simple) budget assumptions.
e. A flexible budget uses realized (actual) volume along with all other original (simple) budget assumptions.
8. 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).
9. Which of the following statements about hospitals is most correct?
a. Patients at general acute care hospitals typically have long patient stays, often 30 or more days.
b. The number of specialty hospitals has declined over the last three decades.
c. The optimal size for a hospital is roughly 50 beds.
d. The majority of hospitals are public or not for profit (as opposed to investor owned).
e. Most physicians involved with hospital services are hospital employees.
10. Which of the following operating metrics is used to monitor labor productivity?
a. Profit per discharge
b. Length of stay (LOS)
c. FTEs per occupied bed
d. Medicare percentage
e. Outpatient revenue percentage