Term
| What is the basic objective and purpose of the hospital enterprise? |
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Definition
| The provision and quality service at reasonable costs to persons needing medical attention and hospital care. |
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Term
State briefly the function of a hospital's
a) Governing Board
b) Medical Director
c) Administrator |
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Definition
Governing Board-to be the ultimate authority and responsibility for the proper and prudent management of the hospital's affairs. Typically, the board carries out its function through a manner of standing committees.
Medical Director-to be the authority and responsibility for the medical aspects of the hospital's activity.
Administrator-to manage day to day operations of a hospital.
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Term
| Why is there a need for information about a hospital's financial position and operation results? |
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Definition
Because of the large number of individaul, yet interdependent, organizational units whose operations must be planned, coordinated, and supervised.
Internal: Hospital managers perform their function effectively through the use of statistical and financial information, both historical and projected.
External: Use most of the same info, groups include third party payers, banks, suppliers, planning agencies, investors, and donors. |
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Term
| What is the primary function of hospital accounting? |
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Definition
| To provide useful information about the hospitals activities and affairs. |
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Term
| State briefly the purpose of a balance sheet |
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Definition
| to present the financial position of a hospital at a particular point in time |
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Term
Define Assets.
List 5 examples of assets that appear of balance sheets. |
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Definition
Assets-the economic resources of the hospital that are recognized and measured in conformity with GAAP
Ex: Cash
Accounts Recievable
Inventory
Prepaid Expenses
Long Term investments
Land, Buildings, Equipment |
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Term
| Distinguish between current and noncurrent assets. Give an example of each |
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Definition
Current assets- like cash or accounts receivable, are assets that will be converted into cash or consumed by operations within one year from the balance sheet date.
Noncurrent assets- like long term investments, would take longer than one year to convert into cash. |
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Term
Define Liabilities
List 5 examples that appear on hospital balance sheets |
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Definition
Liabilities-the economic obligations of the hospital that are recognized and measured in confomity with the GAAP.
-Accounts payable
-Notes Payable
-Accrued expenses payable
-Deferred income
-Bonds payable |
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Term
Distinguish between current and non current liabilites.
Give an example of each |
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Definition
Current liabilites- like accounts payable and notes payable, are obligations that will be paid by the use of current assets within one year from the balance sheet date.
Non current- like long term liabilities, are obligations that will take longer than one year to paid. |
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Term
| State the accounting equation in two alternative forms. |
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Definition
Assets=Liabilities+Net Assets
Assets-Liabilities = NA |
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Term
| What is meant by GAAP? what are the sources of GAAP? |
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Definition
| Generally Accepted Accounting Principles. The primary source is an independent org called the Financial Accounting Standards Board (FASB) |
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Term
| What information should be provided in the heading of a balance sheet? |
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Definition
The name of the accounting entity
The name of the statement
The date of the statement |
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Term
| State briefly the purpose of the statement of operations. |
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Definition
| To present the operation results of a hospital for a specific time period |
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Term
Define revenues
List 4 examples of revenues that appear in S.O.O. |
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Definition
Revenues consist primarily of economic vaules earned by the hospital through the provision of services, and sales of products, to pts.
-Cash recieved from an outpt for laboratory examination
-a billing made to an inpt for a days room and board
-receipts of unrestricted gifts
donor contributions |
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Term
Define expenses.
List 4 examples |
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Definition
expenses-cost of services, supplies, and other items purchased and consumed by the hospital in the provision of pt-care services during a given time period.
-salaries and wages
-supplies
-purchased services
-depreciation |
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Term
| Distinguish between a functional classification of expense and natural classification of expenses |
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Definition
functional- appears according to the divisional organizational units of the hospital.
natural-appears in an object-of-expenditure manner. |
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Term
| What information should be provided in the heading of a statement of operations? |
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Definition
The name of the accounting entity.
The name of the statement
The period of time encompassed by the statement |
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Term
| "In a balance sheet, assets are reported at their fair market values." Do you agree? Explain. |
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Definition
| Yes. FASB issued FAS #124 in the mid 1900s, stating that non for profit organizations are required to report thier investment balances at "market" |
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Term
| "In a hospital statement of operations, revenues represent cash receipts, and expenses represent cash disbursements of the period." Do you agree? Explain. |
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Definition
| No. The statement of operations reports revenues earned( whether or not yet received in cash) and expenses incurred ( whether or not yet paid in cash) |
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Term
| what are interim financial statements? |
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Definition
| Financial statements that are issued during the course of a year. |
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Term
| In hospital accounting, when should revenues and expenses be recognized and recorded? |
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Definition
| in the period in which they are earned, incurred, or consumed. |
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Term
| What is the accounting entity concept? |
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Definition
| The hospital itself is personified as an entity (being) seperate and distinct from its governing board, management, and employees. The hospital is regarded as a "person" capable of owning property, incurring debts, buying and selling, rendering services, and taking other economic actions. |
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Term
| What are two of the major objectives of an effective system of internal control in hospitals? |
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Definition
| Are to safeguard the hospital's assets against error and fraud, and to check the accuracy and reliabilty of the monetary and statistical date provided in accounting reports. |
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