Test Your Basic Accounting Knowledge Quiz

1. An organization's credit and collection policies address which of the following issues?

Charity care, bad debt, and self-pay

Billing procedures

(a) and (b)

Llection agency policies

2. Which of the following is an advantage of having an internal control system?

It gives employees direction through policies and procedures.

It reduces the risk of losing assets through errors.

(a) and (b)

None of the above

3. Accounts receivable are

Money owed to an organization by vendors

Money due to the organization from patients and third parties for services already rendered

Money an organization is set to receive from investments

The financial account in which all monies coming into the organization are placed

4. Which of the following factors set the healthcare industry apart from other industries regarding accounts receivable?

The cost of services

The method of payment for services

The utilization of services

(a) and (b)

5. An organization incurs credit-and-collection costs

Due to excess funds in accounts receivable

For billing and collecting during the organization's average payment cycle

When patients do not pay on time

When it extends credit to patients after providing services

6. An organization incurs delinquency costs

When patients do not pay on time

When it extends credit to patients after providing services

Due to excess funds in accounts receivable

Billing and collecting during the organization's average payment cycle

7. Which of the following is a reason why a hospital may not always collect money due at the time of service?

Hospital policy does not allow money to the collected at the time of service.

Collection of money at the time of service may be considered poor public relations.

The total amount of money owed may not be known at the time of service.

All of the above

8. What is the primary source of data required for reimbursement from third parties?

The medical record

The medical claim form

The fee schedule

None of the above

9. A coding compliance plan should ensure

That an organization is using the right coding resources

That the HIM department is conducting periodic training for all coders

Continuous development and revision of coding policies

All of the above

10. Financial counseling for self-pay patients should include all of the following except

Converge

Consideration of alternative payment options

Diverge

Assistance in setting up a credit card to pay their bills

Information about the organization's credit and collections policies

Investigation of patients’ credit histories to determine to what extent patients can pay their bills

11. Financing accounts receivable involves

Using excess accounts receivable funds for community benefit

Converting outstanding accounts receivable into cash for short-term obligations

Converting outstanding accounts receivable into cash for long-term investments

Using excess accounts receivable funds for investment in capital equipment

12. Which federal law governing accounts receivable applies only to third-party payers?

Truth in Lending Act

Fair Credit Reporting Act

(a) and (b)

Fair Debt Collection Practices Act

13. The average collection period ratio measures

The average amount of time an organization takes to collect a bill

Average number of days that pass before a bill is sent to a collection agency

The number of days an organization is permitted to seek payment for services from patients or third parties

None of the above

14. The Truth in Lending Act

Governs the use of credit reports

Establishes disclosure rules for sales involving consumer credit

Plies only if an organization contracts with a collection agency

Establishes provisions for lending funds in good faith to organizations

15. When an organization uses a lock box procedure for depositing payments

Payers mail payments directly to a bank, which deposits the money

Payments are wired directly to a bank

The organization stores payments in a locked box until they are sent to a bank for deposit

Payments are directly deposited into an organization’s secure account

16. An organization incurs carrying costs

For billing and collecting during the organization's average payment cycle

When patients do not pay on time

When it extends credit to patients after providing services

Due to excess funds in accounts receivable

17. When an organization pledges its accounts receivable, the organization

Uses its receivables as collateral for a loan

Converge

Sells its receivables to a bank or other agency at a discount

Diverge

Promises to use its outstanding accounts receivable for charitable purposes

Invests its accounts receivable in the expansion of the organization

18. The Fair Credit Reporting Act

Establishes disclosure rules for sales involving consumer credit

Applies only if an organization contracts with a collection agency

Governs the use of credit reports

Establishes provisions for reporting individuals’ credit in good f

19. When an organization factors its accounts receivables, the organization

Itemizes the portion of its outstanding accounts receivable that will be used for short-term investments

Es its receivables as collateral for a loan

Sells its receivables to a bank or other agency at a discount

Considers factors outside the organization that may affect its accounts receivable

20. Which federal law governing accounts receivable applies only to third-party payers?

Truth in Lending Act

Fair Credit Reporting Act

(a) and (b)

Fair Debt Collection Practices Act

21. The objective of revenue cycle management is to

Ensure that payments for services are received from third parties

Maintain strict control over an organization's cash flows

Ensure that patients and third parties pay claims

Reduce the collection period