Nursing Home Administration - Finance and Business Quiz

1. The salary of the director of nurses and the administrator are examples of ___ costs.

Fixed

Variable

Semi-variable

Proportionate

The salary of the director of nurses and the administrator are examples of fixed costs because they do not change with the level of production or activity. Regardless of the number of nurses or patients, the salary remains the same. Fixed costs are expenses that remain constant within a certain period, such as rent, insurance, or salaries.

Explanation

The salary of the director of nurses and the administrator are examples of fixed costs because they do not change with the level of production or activity. Regardless of the number of nurses or patients, the salary remains the same. Fixed costs are expenses that remain constant within a certain period, such as rent, insurance, or salaries.

2. A useful form that summarizes the facility's occupancy, listing daily admissions, discharges, and transfers is known as the ___.

Daily census form

Headcount

Weekly census report

Occupancy ratio

A daily census form is a useful tool that provides a summary of a facility's occupancy. It includes information on daily admissions, discharges, and transfers, allowing for a clear understanding of the facility's current population. This form helps track the number of patients in the facility on a daily basis, providing valuable data for planning and resource allocation. It is an essential document for healthcare facilities to monitor and manage their occupancy levels effectively.

Explanation

A daily census form is a useful tool that provides a summary of a facility's occupancy. It includes information on daily admissions, discharges, and transfers, allowing for a clear understanding of the facility's current population. This form helps track the number of patients in the facility on a daily basis, providing valuable data for planning and resource allocation. It is an essential document for healthcare facilities to monitor and manage their occupancy levels effectively.

3. The income statement shows whether ____ were sufficient to cover expenses.

Charges

Revenues

Debts

Retained Earnings

The income statement shows whether revenues were sufficient to cover expenses. The income statement is a financial statement that summarizes a company's revenues, expenses, and net income or loss for a specific period. Revenues represent the income generated from the primary activities of the business, such as sales of goods or services. By comparing revenues to expenses, the income statement provides insight into the profitability of the company and whether it was able to generate enough revenue to cover its expenses.

Explanation

The income statement shows whether revenues were sufficient to cover expenses. The income statement is a financial statement that summarizes a company's revenues, expenses, and net income or loss for a specific period. Revenues represent the income generated from the primary activities of the business, such as sales of goods or services. By comparing revenues to expenses, the income statement provides insight into the profitability of the company and whether it was able to generate enough revenue to cover its expenses.

4. The portion of a brand in the form of a symbol, design, or distinctive coloring or letter, also called a logo, is an organization's ___.

Intangible asset

Sign

Brand mark

Original art

A brand mark refers to the portion of a brand that is represented by a symbol, design, or distinctive coloring or letter, commonly known as a logo. This visual element serves as a unique identifier for an organization and helps to differentiate it from its competitors. It is an important component of a brand's visual identity and plays a crucial role in building brand recognition and recall among consumers. Therefore, the correct answer is brand mark.

Explanation

A brand mark refers to the portion of a brand that is represented by a symbol, design, or distinctive coloring or letter, commonly known as a logo. This visual element serves as a unique identifier for an organization and helps to differentiate it from its competitors. It is an important component of a brand's visual identity and plays a crucial role in building brand recognition and recall among consumers. Therefore, the correct answer is brand mark.

5. Making a debit and a credit entry for each transaction is known as the ____ system of accounting.

Single/double

Systematic

Alternate

Double-entry

The correct answer is "Double-entry" because this system of accounting requires recording both a debit and a credit entry for each transaction. This method ensures that the accounting equation (assets = liabilities + equity) is maintained and provides a more accurate representation of the financial transactions. It allows for better tracking of financial activities and helps in identifying errors or discrepancies in the accounts.

Explanation

The correct answer is "Double-entry" because this system of accounting requires recording both a debit and a credit entry for each transaction. This method ensures that the accounting equation (assets = liabilities + equity) is maintained and provides a more accurate representation of the financial transactions. It allows for better tracking of financial activities and helps in identifying errors or discrepancies in the accounts.

6. Things owned by the facility are normally referred to as ____.

Debentures

Assets

Possessions

Tangibles

Assets are things owned by a facility or organization. They can include tangible items such as property, equipment, and inventory, as well as intangible items such as patents, trademarks, and intellectual property. Assets are recorded on a company's balance sheet and are an important part of its financial health and value.

Explanation

Assets are things owned by a facility or organization. They can include tangible items such as property, equipment, and inventory, as well as intangible items such as patents, trademarks, and intellectual property. Assets are recorded on a company's balance sheet and are an important part of its financial health and value.

7. To safeguard the finances of a facility, procedures should be arranged to establish a system of ___ so that employees review each other's financial activities.

Checks

Dual bookkeeping

Checks and balances

Anti-theft devices

Checks and balances is the correct answer because it refers to a system where employees review each other's financial activities to ensure accuracy and prevent fraud. This system helps to safeguard the finances of a facility by creating accountability and transparency in financial transactions. It involves multiple layers of oversight and verification, reducing the risk of errors or intentional wrongdoing. Dual bookkeeping, although related, does not encompass the idea of employees reviewing each other's activities. Anti-theft devices, on the other hand, are physical security measures that may deter theft but do not address the need for internal financial controls.

Explanation

Checks and balances is the correct answer because it refers to a system where employees review each other's financial activities to ensure accuracy and prevent fraud. This system helps to safeguard the finances of a facility by creating accountability and transparency in financial transactions. It involves multiple layers of oversight and verification, reducing the risk of errors or intentional wrongdoing. Dual bookkeeping, although related, does not encompass the idea of employees reviewing each other's activities. Anti-theft devices, on the other hand, are physical security measures that may deter theft but do not address the need for internal financial controls.

8. The accountant, upon successfully bringing the expense and revenue accounts to zero, has successfully ____.

Calculated profit

Calculated losses

Closed the books

Completed the financial statements

When the accountant brings the expense and revenue accounts to zero, it means that all expenses and revenues have been properly recorded and accounted for. Closing the books refers to the process of finalizing the accounting records for a specific period, typically at the end of the financial year. By closing the books, the accountant ensures that all transactions have been accurately recorded, allowing for the preparation of accurate financial statements such as the income statement and balance sheet. Therefore, the correct answer is "Closed the books."

Explanation

When the accountant brings the expense and revenue accounts to zero, it means that all expenses and revenues have been properly recorded and accounted for. Closing the books refers to the process of finalizing the accounting records for a specific period, typically at the end of the financial year. By closing the books, the accountant ensures that all transactions have been accurately recorded, allowing for the preparation of accurate financial statements such as the income statement and balance sheet. Therefore, the correct answer is "Closed the books."

9. Congress' purpose for passing accelerated depreciation was to ___ of new facilities.

Discourage overbuilding

Encourage more building

Regulate construction

Deregulate construction

The Congress passed accelerated depreciation with the purpose of encouraging more building. This means that they wanted to incentivize the construction of new facilities by allowing for faster depreciation of assets. By doing so, they hoped to stimulate economic growth and development in the construction industry.

Explanation

The Congress passed accelerated depreciation with the purpose of encouraging more building. This means that they wanted to incentivize the construction of new facilities by allowing for faster depreciation of assets. By doing so, they hoped to stimulate economic growth and development in the construction industry.

10. Nursing and physical therapy are normally thought of as ___ centers.

Cost

Loss

Revenue

Break-even

Nursing and physical therapy are normally thought of as revenue centers because they generate income for healthcare facilities. Both nursing and physical therapy services are billable to patients or insurance companies, bringing in revenue for the organization. These services are often in high demand, and healthcare facilities can generate significant income by providing them. Therefore, it is appropriate to consider nursing and physical therapy as revenue centers.

Explanation

Nursing and physical therapy are normally thought of as revenue centers because they generate income for healthcare facilities. Both nursing and physical therapy services are billable to patients or insurance companies, bringing in revenue for the organization. These services are often in high demand, and healthcare facilities can generate significant income by providing them. Therefore, it is appropriate to consider nursing and physical therapy as revenue centers.

11. When the financial manager classifies an expense as an asset because it benefits the facility for more than 1 year he has ___ the expense.

Adjusted

Reduced

Spread

Capitalized

When the financial manager classifies an expense as an asset because it benefits the facility for more than 1 year, it means that they have capitalized the expense. This means that instead of recognizing the expense immediately on the income statement, it is recorded as an asset on the balance sheet. By doing so, the expense is spread out over its useful life through depreciation or amortization, reflecting its long-term benefit to the facility. This helps in matching the expense with the revenue it generates over time, providing a more accurate representation of the facility's financial position.

Explanation

When the financial manager classifies an expense as an asset because it benefits the facility for more than 1 year, it means that they have capitalized the expense. This means that instead of recognizing the expense immediately on the income statement, it is recorded as an asset on the balance sheet. By doing so, the expense is spread out over its useful life through depreciation or amortization, reflecting its long-term benefit to the facility. This helps in matching the expense with the revenue it generates over time, providing a more accurate representation of the facility's financial position.

12. The largest directly controllable cost for the average administrator is ____.

Inventory/supplies

Labor

Long-term debt financing costs

Short-term debt financing costs

The largest directly controllable cost for the average administrator is labor. This means that administrators have the ability to directly influence and manage the expenses related to the workforce. Labor costs typically include wages, salaries, benefits, and other expenses associated with hiring and retaining employees. By effectively managing labor costs, administrators can optimize their budget and allocate resources efficiently.

Explanation

The largest directly controllable cost for the average administrator is labor. This means that administrators have the ability to directly influence and manage the expenses related to the workforce. Labor costs typically include wages, salaries, benefits, and other expenses associated with hiring and retaining employees. By effectively managing labor costs, administrators can optimize their budget and allocate resources efficiently.

13. Payroll deductions are subtracted from _ to arrive at the employee's _ pay.

Net/gross

Total/net

Gross/net

Overall/take-home

Payroll deductions are subtracted from the gross pay to arrive at the employee's net pay. Gross pay refers to the total amount of wages or salary earned by an employee before any deductions are taken out. Net pay, on the other hand, is the amount of money that an employee takes home after all deductions, such as taxes, insurance premiums, and retirement contributions, have been subtracted from their gross pay. Therefore, the correct answer is Gross/net.

Explanation

Payroll deductions are subtracted from the gross pay to arrive at the employee's net pay. Gross pay refers to the total amount of wages or salary earned by an employee before any deductions are taken out. Net pay, on the other hand, is the amount of money that an employee takes home after all deductions, such as taxes, insurance premiums, and retirement contributions, have been subtracted from their gross pay. Therefore, the correct answer is Gross/net.

14. When asked whether funds are readily available for a $75,000 purchase and the accountant responds that the net worth is well over $800,000 and to go ahead with the purchase, the administrator should ____.

Ask for a statement of working capital

Make the purchase

Seek a vertical analysis

Amortize the purchase

The correct answer is to ask for a statement of working capital. This is because the accountant's response of stating the net worth does not provide information about the liquidity or availability of funds for the specific purchase. By asking for a statement of working capital, the administrator can assess the current assets and liabilities of the organization to determine if there are sufficient funds for the purchase without jeopardizing the financial stability of the company.

Explanation

The correct answer is to ask for a statement of working capital. This is because the accountant's response of stating the net worth does not provide information about the liquidity or availability of funds for the specific purchase. By asking for a statement of working capital, the administrator can assess the current assets and liabilities of the organization to determine if there are sufficient funds for the purchase without jeopardizing the financial stability of the company.

15. At the end of a time period, when debits do not match credits exactly, the accountant can first assume an error has been made in ___.

Recording transactions

Entering debits

Entering credits

Source documents

The correct answer is "Recording transactions" because if the debits and credits do not match exactly at the end of a time period, it suggests that there may have been errors in the recording of transactions. This could mean that some transactions were not recorded at all, or that they were recorded incorrectly, resulting in an imbalance between debits and credits. By assuming an error in recording transactions, the accountant can then investigate and correct any mistakes that may have occurred.

Explanation

The correct answer is "Recording transactions" because if the debits and credits do not match exactly at the end of a time period, it suggests that there may have been errors in the recording of transactions. This could mean that some transactions were not recorded at all, or that they were recorded incorrectly, resulting in an imbalance between debits and credits. By assuming an error in recording transactions, the accountant can then investigate and correct any mistakes that may have occurred.

16. A financial statement in which the assets must equal the liability and capital accounts is known as the ____.

Ending statement

Final statement

Balance sheet

Financial statement

A balance sheet is a financial statement that presents a company's financial position at a specific point in time. It shows the company's assets (what it owns), liabilities (what it owes), and capital accounts (the owner's equity or investment in the business). The balance sheet follows the fundamental accounting equation, which states that assets must equal liabilities plus capital. Therefore, a balance sheet is the correct answer as it accurately describes a financial statement where the assets must equal the liability and capital accounts.

Explanation

A balance sheet is a financial statement that presents a company's financial position at a specific point in time. It shows the company's assets (what it owns), liabilities (what it owes), and capital accounts (the owner's equity or investment in the business). The balance sheet follows the fundamental accounting equation, which states that assets must equal liabilities plus capital. Therefore, a balance sheet is the correct answer as it accurately describes a financial statement where the assets must equal the liability and capital accounts.

17. Responsibility and blame for overspending in the department of nursing and in food services is typically assigned by the owners to the ____.

Director of nursing and director of food services

Director of nursing and the dietitian

Chief financial officer

Administrator

The responsibility and blame for overspending in the department of nursing and in food services is typically assigned by the owners to the administrator. The administrator is the person who is in charge of managing and overseeing the overall operations of the organization. They are responsible for making financial decisions and ensuring that the budget is properly allocated. Therefore, it is logical for the owners to hold the administrator accountable for any overspending in these departments.

Explanation

The responsibility and blame for overspending in the department of nursing and in food services is typically assigned by the owners to the administrator. The administrator is the person who is in charge of managing and overseeing the overall operations of the organization. They are responsible for making financial decisions and ensuring that the budget is properly allocated. Therefore, it is logical for the owners to hold the administrator accountable for any overspending in these departments.

18. Land ___ is a depreciable asset.

Never

Sometimes

For for-profit facilities

For nonprofit facilities

Land is a depreciable asset because it is considered to have an unlimited useful life and its value does not decrease over time. Depreciation is the allocation of the cost of an asset over its useful life, and since land does not wear out or become obsolete, it is not subject to depreciation. Therefore, the correct answer is "Never."

Explanation

Land is a depreciable asset because it is considered to have an unlimited useful life and its value does not decrease over time. Depreciation is the allocation of the cost of an asset over its useful life, and since land does not wear out or become obsolete, it is not subject to depreciation. Therefore, the correct answer is "Never."

19. Any possession of the facility which will be or could be turned into cash within 12 months is a ____.

Noncurrent asset

Current asset

Benefit

Positive asset

A current asset refers to any possession of a facility that can be converted into cash within a period of 12 months. This includes assets such as cash, accounts receivable, inventory, and short-term investments. These assets are expected to be utilized or sold within a year and are essential for the day-to-day operations of a business. Therefore, the correct answer is current asset.

Explanation

A current asset refers to any possession of a facility that can be converted into cash within a period of 12 months. This includes assets such as cash, accounts receivable, inventory, and short-term investments. These assets are expected to be utilized or sold within a year and are essential for the day-to-day operations of a business. Therefore, the correct answer is current asset.

20. The staff person responsible for assuring that the business office runs smoothly is, in the final analysis, ____.

Corporate finance director

The administrator

Business office staff

Facility treasurer

The administrator is responsible for ensuring that the business office runs smoothly. They oversee and manage the day-to-day operations, coordinate with staff members, and make decisions to maintain efficiency and effectiveness. They play a crucial role in maintaining the overall functioning of the business office and ensuring that all tasks and responsibilities are carried out smoothly.

Explanation

The administrator is responsible for ensuring that the business office runs smoothly. They oversee and manage the day-to-day operations, coordinate with staff members, and make decisions to maintain efficiency and effectiveness. They play a crucial role in maintaining the overall functioning of the business office and ensuring that all tasks and responsibilities are carried out smoothly.

21. At the end of a time period, total expenses are subtracted from total revenues to compute the ____.

Net income, or profit or loss

Approximate income

Adjusted income margin

Operating income

At the end of a time period, the calculation of net income, or profit or loss, involves subtracting total expenses from total revenues. This calculation helps determine the overall financial performance of a business during that period. Net income represents the amount of money that remains after all expenses have been deducted from revenues, indicating whether the company has made a profit or incurred a loss.

Explanation

At the end of a time period, the calculation of net income, or profit or loss, involves subtracting total expenses from total revenues. This calculation helps determine the overall financial performance of a business during that period. Net income represents the amount of money that remains after all expenses have been deducted from revenues, indicating whether the company has made a profit or incurred a loss.

22. Plans for expenditures for buildings, major equipment, and the like are normally part of the ___ budget.

Cash

Revenue

Expense

Capital

The correct answer is "Capital" because when planning for expenditures for buildings, major equipment, and similar items, it is typically done as part of the capital budget. The capital budget focuses on long-term investments and assets that will benefit the organization over an extended period of time. This includes expenses related to acquiring, upgrading, or maintaining physical assets such as buildings and equipment.

Explanation

The correct answer is "Capital" because when planning for expenditures for buildings, major equipment, and similar items, it is typically done as part of the capital budget. The capital budget focuses on long-term investments and assets that will benefit the organization over an extended period of time. This includes expenses related to acquiring, upgrading, or maintaining physical assets such as buildings and equipment.

23. Funds that have been put into the facility by owners or others, and retained earnings that have been put back into the facility are usually included when calculating the ____.

Net worth

Bottom line

Final value

Financial liabilities

When calculating net worth, funds that have been invested into the facility by owners or others, as well as retained earnings that have been reinvested into the facility, are typically included. Net worth represents the total value of assets minus liabilities and reflects the overall financial health and value of the facility.

Explanation

When calculating net worth, funds that have been invested into the facility by owners or others, as well as retained earnings that have been reinvested into the facility, are typically included. Net worth represents the total value of assets minus liabilities and reflects the overall financial health and value of the facility.

24. Upon discovering that the new accountant had set the actual purchase price paid (e.g., no tax, delivery, or similar costs) for the assets to be depreciated, the facility administrator would normally feel the accountant was ___.

Sharp and on the ball

Not serving the facility well

Overestimating historical costs

Doing OK, all things considered

The facility administrator would normally feel that the accountant was not serving the facility well because by setting the actual purchase price without considering additional costs such as tax, delivery, or similar costs, the accountant is not accurately reflecting the true value of the assets. This could lead to incorrect depreciation calculations and potentially impact the facility's financial records and reporting.

Explanation

The facility administrator would normally feel that the accountant was not serving the facility well because by setting the actual purchase price without considering additional costs such as tax, delivery, or similar costs, the accountant is not accurately reflecting the true value of the assets. This could lead to incorrect depreciation calculations and potentially impact the facility's financial records and reporting.

25. Medical supplies, food supplies, and postage for billing residents are ___ costs.

Fixed

Variable

Semi-variable

Break-even

Medical supplies, food supplies, and postage for billing residents are considered variable costs because they can vary in direct proportion to the number of residents or patients being served. These costs will increase or decrease as the volume of services provided changes. For example, if the number of residents increases, the amount of medical supplies and food supplies needed will also increase. Similarly, the postage required for billing residents will vary based on the number of bills sent out. Therefore, these costs are variable and not fixed or semi-variable.

Explanation

Medical supplies, food supplies, and postage for billing residents are considered variable costs because they can vary in direct proportion to the number of residents or patients being served. These costs will increase or decrease as the volume of services provided changes. For example, if the number of residents increases, the amount of medical supplies and food supplies needed will also increase. Similarly, the postage required for billing residents will vary based on the number of bills sent out. Therefore, these costs are variable and not fixed or semi-variable.

26. The primary purpose of the Generally Accepted Accounting Principles is to ____.

Guarantee honesty among providers

Maximize comparability of financial statements of different organizations

Create a single view among financial managers

Protect the owners

The primary purpose of the Generally Accepted Accounting Principles (GAAP) is to maximize comparability of financial statements of different organizations. GAAP provides a set of standard guidelines and principles that ensure consistency and uniformity in financial reporting. This allows for easier comparison of financial statements between different organizations, enabling stakeholders to make informed decisions and analyze the financial performance of companies more effectively. By promoting comparability, GAAP enhances transparency and trust in financial reporting, benefiting investors, creditors, and other users of financial statements.

Explanation

The primary purpose of the Generally Accepted Accounting Principles (GAAP) is to maximize comparability of financial statements of different organizations. GAAP provides a set of standard guidelines and principles that ensure consistency and uniformity in financial reporting. This allows for easier comparison of financial statements between different organizations, enabling stakeholders to make informed decisions and analyze the financial performance of companies more effectively. By promoting comparability, GAAP enhances transparency and trust in financial reporting, benefiting investors, creditors, and other users of financial statements.

27. Things owed by the facility, its obligations, are normally referred to as ____.

Capital

Unpaid bills

Invoices

Liabilities

Liabilities are the things owed by a facility, such as debts, obligations, or financial responsibilities. This can include unpaid bills, invoices, loans, or any other financial commitments that the facility needs to fulfill. Liabilities are an important aspect of a facility's financial health and are typically recorded on the balance sheet.

Explanation

Liabilities are the things owed by a facility, such as debts, obligations, or financial responsibilities. This can include unpaid bills, invoices, loans, or any other financial commitments that the facility needs to fulfill. Liabilities are an important aspect of a facility's financial health and are typically recorded on the balance sheet.

28. The frozen food contractor arrives, places the order in the freezer, checks off the receiving slip, hands it to the appropriate kitchen employee who thanks the contractor, and hands the receiving slip and purchase order copy to the director of food services. The administrator, on observing this, should ___.

Be pleased with the smoothness of the working relationship

Compliment the contractor for an efficient delivery

Be upset

Continue to enjoy his/her cup of coffee

The administrator should be upset because the contractor did not follow the correct procedure of delivering the order to the director of food services. The contractor handed the receiving slip to a kitchen employee instead of directly giving it to the director. This breaks the established protocol and could lead to confusion or errors in the future.

Explanation

The administrator should be upset because the contractor did not follow the correct procedure of delivering the order to the director of food services. The contractor handed the receiving slip to a kitchen employee instead of directly giving it to the director. This breaks the established protocol and could lead to confusion or errors in the future.

29. Under double-entry bookkeeping, when a bill is sent to Ms. Jones for $3,000 for the past month's care, the bookkeeper would normally record $3,000 in the debit column as an increase in assets and ____.

Record $3,000 on the credit side as an increase in revenue

Record $3,000 as received

Wait for the payment before entering further data

Enter an estimate of when the bill will be paid

When a bill is sent to Ms. Jones for $3,000 for the past month's care, the bookkeeper would normally record $3,000 on the credit side as an increase in revenue. This is because revenue is recorded on the credit side in double-entry bookkeeping to reflect an increase in income or earnings. By recording the $3,000 as revenue, the bookkeeper acknowledges the amount earned from providing care to Ms. Jones and properly reflects it in the financial records.

Explanation

When a bill is sent to Ms. Jones for $3,000 for the past month's care, the bookkeeper would normally record $3,000 on the credit side as an increase in revenue. This is because revenue is recorded on the credit side in double-entry bookkeeping to reflect an increase in income or earnings. By recording the $3,000 as revenue, the bookkeeper acknowledges the amount earned from providing care to Ms. Jones and properly reflects it in the financial records.

30. In a facility having high fixed costs, the pressure to keep beds filled is ___ in facilities with low fixed costs.

About the same

Stronger than

Weaker than

More moderate than

In a facility with high fixed costs, there is a greater need to keep beds filled in order to generate enough revenue to cover those costs. This pressure is stronger in comparison to facilities with low fixed costs, where the financial impact of empty beds may not be as significant. Therefore, the correct answer is "Stronger than."

Explanation

In a facility with high fixed costs, there is a greater need to keep beds filled in order to generate enough revenue to cover those costs. This pressure is stronger in comparison to facilities with low fixed costs, where the financial impact of empty beds may not be as significant. Therefore, the correct answer is "Stronger than."

31. The GAAPS's do not normally require financial statements prepared for general distribution to include ____.

Income statement, or profit/loss statement

Balance sheet, or statement of financial position

Statement of changes in financial position

Chart of accounts

The GAAPs, or Generally Accepted Accounting Principles, provide guidelines for financial reporting. One of the main components of financial statements is the chart of accounts, which lists all the accounts used by a company to record its financial transactions. However, the GAAPs do not require financial statements prepared for general distribution to include the chart of accounts. The chart of accounts is typically used internally by the company's accounting department and may not be relevant or necessary for external users of the financial statements.

Explanation

The GAAPs, or Generally Accepted Accounting Principles, provide guidelines for financial reporting. One of the main components of financial statements is the chart of accounts, which lists all the accounts used by a company to record its financial transactions. However, the GAAPs do not require financial statements prepared for general distribution to include the chart of accounts. The chart of accounts is typically used internally by the company's accounting department and may not be relevant or necessary for external users of the financial statements.

32. A facility has current assets of $403,898 and current liabilities of $367,000. Its current ratio is ____.

9

3

1.1

2.1

The current ratio is calculated by dividing current assets by current liabilities. In this case, the current assets are $403,898 and the current liabilities are $367,000. Dividing these two values gives us a current ratio of approximately 1.1. This means that the facility has $1.10 in current assets for every $1.00 in current liabilities.

Explanation

The current ratio is calculated by dividing current assets by current liabilities. In this case, the current assets are $403,898 and the current liabilities are $367,000. Dividing these two values gives us a current ratio of approximately 1.1. This means that the facility has $1.10 in current assets for every $1.00 in current liabilities.

33. Allowing the bookkeeper to destroy vouchers showing payments made for meals to employees once these are recorded may violate the ___ concept.

Objective evidence

Consistency

Time period

Entity

Allowing the bookkeeper to destroy vouchers showing payments made for meals to employees once these are recorded may violate the objective evidence concept. This concept requires that financial transactions be supported by verifiable and reliable documentation. By destroying the vouchers, there would be no tangible evidence to support the payments made for meals to employees, which could lead to a lack of transparency and accuracy in the financial records.

Explanation

Allowing the bookkeeper to destroy vouchers showing payments made for meals to employees once these are recorded may violate the objective evidence concept. This concept requires that financial transactions be supported by verifiable and reliable documentation. By destroying the vouchers, there would be no tangible evidence to support the payments made for meals to employees, which could lead to a lack of transparency and accuracy in the financial records.

34. The administrator seeks to be licensed without having to meet all the conditions new entrants would have to meet. She seeks to be ___.

Grandfathered

Granted concessions

Avoiding current requirements

Advancing herself

The term "grandfathered" refers to a situation where an individual is exempted from certain requirements or conditions that new entrants would have to meet. In this case, the administrator wants to be licensed without having to fulfill all the conditions that new entrants are required to meet. Therefore, the correct answer is "grandfathered."

Explanation

The term "grandfathered" refers to a situation where an individual is exempted from certain requirements or conditions that new entrants would have to meet. In this case, the administrator wants to be licensed without having to fulfill all the conditions that new entrants are required to meet. Therefore, the correct answer is "grandfathered."

35. Under accrual accounting, when the accountant shows the amount of medical supplies used during a month in the cash disbursements journal and the general journal the bookkeeper has made ____.

A mistake

An adjusting entry

An inappropriate entry

A good accounting judgement

Under accrual accounting, the accountant shows the amount of medical supplies used during a month in the adjusting entry. This is because under accrual accounting, expenses are recognized when they are incurred, regardless of when the cash is actually paid. Therefore, the entry to record the amount of medical supplies used would be an adjusting entry, which ensures that the financial statements accurately reflect the expenses incurred during the period.

Explanation

Under accrual accounting, the accountant shows the amount of medical supplies used during a month in the adjusting entry. This is because under accrual accounting, expenses are recognized when they are incurred, regardless of when the cash is actually paid. Therefore, the entry to record the amount of medical supplies used would be an adjusting entry, which ensures that the financial statements accurately reflect the expenses incurred during the period.

36. Depreciation is an expense associated with the use of ____.

A purchase

An asset

Land

A specified purchase

Depreciation is an expense associated with the use of an asset. When an asset is used over time, it gradually loses its value due to wear and tear, obsolescence, or other factors. Depreciation is a way to allocate the cost of the asset over its useful life. By recognizing depreciation as an expense, businesses can accurately reflect the reduction in value of their assets on their financial statements. Therefore, the correct answer is "An asset."

Explanation

Depreciation is an expense associated with the use of an asset. When an asset is used over time, it gradually loses its value due to wear and tear, obsolescence, or other factors. Depreciation is a way to allocate the cost of the asset over its useful life. By recognizing depreciation as an expense, businesses can accurately reflect the reduction in value of their assets on their financial statements. Therefore, the correct answer is "An asset."

37. At the end of each year for facilities participating in Medicare, a Medicare Cost Reconciliation settlement occurs in which ___.

The facility receives additional money

The facility pays out additional money

The facility receives or pays back money

A flat rate per patient per month is paid the facility

At the end of each year for facilities participating in Medicare, a Medicare Cost Reconciliation settlement occurs. This means that the facility may either receive money or have to pay back money to Medicare, depending on the financial calculations and adjustments made during the reconciliation process. The settlement aims to ensure that the facility is appropriately reimbursed for the services provided to Medicare patients, taking into account any overpayments or underpayments that may have occurred throughout the year.

Explanation

At the end of each year for facilities participating in Medicare, a Medicare Cost Reconciliation settlement occurs. This means that the facility may either receive money or have to pay back money to Medicare, depending on the financial calculations and adjustments made during the reconciliation process. The settlement aims to ensure that the facility is appropriately reimbursed for the services provided to Medicare patients, taking into account any overpayments or underpayments that may have occurred throughout the year.

38. As a practical matter, most owners do not fund depreciation and treat it as ___.

Money available to the facility to spend

Money to be placed in reserve

A fiction

A useless set of required calculations

Most owners do not allocate funds specifically for depreciation expenses. Instead, they consider it as money available to the facility to spend. This means that they view depreciation as a source of funds that can be used for other purposes within the facility, rather than setting it aside as a reserve or considering it as a useless set of calculations.

Explanation

Most owners do not allocate funds specifically for depreciation expenses. Instead, they consider it as money available to the facility to spend. This means that they view depreciation as a source of funds that can be used for other purposes within the facility, rather than setting it aside as a reserve or considering it as a useless set of calculations.

39. Perhaps the only way to maintain an accurate count of supplies consumed and those remaining is to use ___.

A computer program

A hand-counted inventory system

A receipt inventory system

A perpetual inventory system

A perpetual inventory system is the best way to maintain an accurate count of supplies consumed and those remaining because it continuously updates inventory records in real-time. This system uses computer software to track and monitor inventory levels, automatically adjusting quantities as items are bought or sold. It eliminates the need for manual counting and provides accurate and up-to-date information about stock levels, allowing businesses to make informed decisions about purchasing and restocking.

Explanation

A perpetual inventory system is the best way to maintain an accurate count of supplies consumed and those remaining because it continuously updates inventory records in real-time. This system uses computer software to track and monitor inventory levels, automatically adjusting quantities as items are bought or sold. It eliminates the need for manual counting and provides accurate and up-to-date information about stock levels, allowing businesses to make informed decisions about purchasing and restocking.

40. Assets that can be capitalized or depreciated differ from other assets of a facility in that they are used in operations for more than _ and will not be converted into _ within the year.

One time period/cash

Two time periods/debt

A balance sheet period/securities

3 years/cash

Assets that can be capitalized or depreciated differ from other assets of a facility in that they are used in operations for more than one time period and will not be converted into cash within the year.

Explanation

Assets that can be capitalized or depreciated differ from other assets of a facility in that they are used in operations for more than one time period and will not be converted into cash within the year.

41. The accountant has listed the new building annex, the new central air conditioning system, and the supplies for the next 6 months as capital expenses. The administrator should.

Be pleased with the decision

Forward the report to corporate headquarters

Rewrite the report

Look for a new accountant

The correct answer is "Look for a new accountant." The reason for this is that capital expenses are typically long-term investments that benefit the company over a period of time, such as the new building annex. However, the central air conditioning system and supplies for the next 6 months are not considered capital expenses as they are short-term in nature and do not provide long-term benefits. Therefore, the accountant has made an error in categorizing these items as capital expenses, indicating a lack of understanding or knowledge in accounting principles. Hence, the administrator should consider finding a new accountant who has a better understanding of accounting principles.

Explanation

The correct answer is "Look for a new accountant." The reason for this is that capital expenses are typically long-term investments that benefit the company over a period of time, such as the new building annex. However, the central air conditioning system and supplies for the next 6 months are not considered capital expenses as they are short-term in nature and do not provide long-term benefits. Therefore, the accountant has made an error in categorizing these items as capital expenses, indicating a lack of understanding or knowledge in accounting principles. Hence, the administrator should consider finding a new accountant who has a better understanding of accounting principles.

42. The three owners hold all the shares in the facility. They have a ___.

Cash cow

Profitable operation

Semipublic corporation

Privately held company

The given information states that the three owners hold all the shares in the facility, indicating that the ownership is not publicly traded. A privately held company refers to a business that is owned by a small group of individuals or a family, and their shares are not available for public trading. Therefore, the correct answer is "Privately held company."

Explanation

The given information states that the three owners hold all the shares in the facility, indicating that the ownership is not publicly traded. A privately held company refers to a business that is owned by a small group of individuals or a family, and their shares are not available for public trading. Therefore, the correct answer is "Privately held company."

43. The new accountant informs the administrator that to simplify things, he has incorporated all purchases that will be paid for the next few years into the accounts payable journal. The administrator should ____.

Compliment the accountant

Ask for last year's books to be conformed to the new system

Begin a search for a new accountant

As that these purchases be transferred to the general journal

The new accountant's action of incorporating all purchases that will be paid for the next few years into the accounts payable journal indicates a lack of understanding of proper accounting practices. This action can lead to inaccurate financial statements and misrepresentation of the company's financial position. Therefore, the administrator should begin a search for a new accountant who has a better understanding of accounting principles and can ensure accurate financial record-keeping.

Explanation

The new accountant's action of incorporating all purchases that will be paid for the next few years into the accounts payable journal indicates a lack of understanding of proper accounting practices. This action can lead to inaccurate financial statements and misrepresentation of the company's financial position. Therefore, the administrator should begin a search for a new accountant who has a better understanding of accounting principles and can ensure accurate financial record-keeping.

44. Money invested in the facility, also known as the facility's net worth, is normally referred to as ____.

Stock

Collateral

Capital

Income stream

Money invested in a facility, also known as the facility's net worth, is referred to as capital. Capital represents the financial resources that a facility has available for investment, expansion, or other business activities. It includes both the initial investment and any additional funds that have been invested in the facility over time. Capital is a crucial component for businesses as it enables them to purchase assets, cover operational expenses, and generate income.

Explanation

Money invested in a facility, also known as the facility's net worth, is referred to as capital. Capital represents the financial resources that a facility has available for investment, expansion, or other business activities. It includes both the initial investment and any additional funds that have been invested in the facility over time. Capital is a crucial component for businesses as it enables them to purchase assets, cover operational expenses, and generate income.

45. The administrator wishes to lease a building and acquire substantial property rights in the process. She seeks ___.

A leasehold

A long-term lease

A capital lease

Refinancing

The administrator is seeking a capital lease because it allows her to acquire substantial property rights in the process of leasing a building. A capital lease is a type of lease agreement that gives the lessee (in this case, the administrator) ownership rights and responsibilities similar to those of a property owner. This means that the administrator would have control over the property and would be responsible for maintenance, insurance, and taxes, just like a property owner.

Explanation

The administrator is seeking a capital lease because it allows her to acquire substantial property rights in the process of leasing a building. A capital lease is a type of lease agreement that gives the lessee (in this case, the administrator) ownership rights and responsibilities similar to those of a property owner. This means that the administrator would have control over the property and would be responsible for maintenance, insurance, and taxes, just like a property owner.

46. An administrator directing the accountant to record revenues when they are earned and expenses when they are incurred by matching revenues and expenses for each time period is the advantage of the ____ system of accounting.

Accrual

Cash

Simplified

Advanced

The advantage of the accrual system of accounting is that it allows the recording of revenues when they are earned and expenses when they are incurred. This ensures that revenues and expenses are matched for each time period, providing a more accurate representation of the financial position and performance of a business. The accrual system recognizes that even if cash has not been received or paid, transactions still impact the financial statements. This method provides a more comprehensive view of a company's financial activities and allows for better decision-making.

Explanation

The advantage of the accrual system of accounting is that it allows the recording of revenues when they are earned and expenses when they are incurred. This ensures that revenues and expenses are matched for each time period, providing a more accurate representation of the financial position and performance of a business. The accrual system recognizes that even if cash has not been received or paid, transactions still impact the financial statements. This method provides a more comprehensive view of a company's financial activities and allows for better decision-making.

47. When an administrator notes that there are $600,000 in notes payable on the financial reports, she knows these must be paid within ____.

6 months

1 year

1 month

90 days

The administrator notes that there are $600,000 in notes payable on the financial reports. Notes payable are a type of short-term liability that a company owes to its creditors. They represent the amount of money that the company needs to repay within a specific period. In this case, since the administrator knows that the notes payable are $600,000, it indicates that these debts must be paid within a longer time frame. The only option that aligns with this is 1 year, as it represents a longer period compared to the other options provided (6 months, 1 month, and 90 days).

Explanation

The administrator notes that there are $600,000 in notes payable on the financial reports. Notes payable are a type of short-term liability that a company owes to its creditors. They represent the amount of money that the company needs to repay within a specific period. In this case, since the administrator knows that the notes payable are $600,000, it indicates that these debts must be paid within a longer time frame. The only option that aligns with this is 1 year, as it represents a longer period compared to the other options provided (6 months, 1 month, and 90 days).

48. The administrator asks the bank for an instrument stating that that bank has granted the holder the amount of credit equal to the face amount wants a ___.

Short-term loan

Long-term loan

Letter of credit

Letter of assurance

The correct answer is "Letter of credit". A letter of credit is a financial instrument issued by a bank that guarantees payment to a seller on behalf of a buyer. It assures the seller that the bank will pay them the specified amount if the buyer fails to fulfill their payment obligations. In this scenario, the administrator is requesting a document from the bank stating that they have granted the holder a credit amount equal to the face value, indicating the need for a letter of credit.

Explanation

The correct answer is "Letter of credit". A letter of credit is a financial instrument issued by a bank that guarantees payment to a seller on behalf of a buyer. It assures the seller that the bank will pay them the specified amount if the buyer fails to fulfill their payment obligations. In this scenario, the administrator is requesting a document from the bank stating that they have granted the holder a credit amount equal to the face value, indicating the need for a letter of credit.

49. Generating reports on the financial standing of the nursing facility is generally assigned to ____.

The accountant

The director of financial

The administrative assistant

The chief financial officer (CFO)

The accountant is responsible for generating reports on the financial standing of the nursing facility. As a financial professional, the accountant has the necessary skills and knowledge to compile and analyze financial data, prepare financial statements, and generate reports that provide an accurate and comprehensive overview of the facility's financial performance. This role requires expertise in accounting principles, financial analysis, and report preparation, making the accountant the most suitable person for this task. The director of financial, administrative assistant, and chief financial officer may have other responsibilities related to financial management but are not specifically assigned to generate reports.

Explanation

The accountant is responsible for generating reports on the financial standing of the nursing facility. As a financial professional, the accountant has the necessary skills and knowledge to compile and analyze financial data, prepare financial statements, and generate reports that provide an accurate and comprehensive overview of the facility's financial performance. This role requires expertise in accounting principles, financial analysis, and report preparation, making the accountant the most suitable person for this task. The director of financial, administrative assistant, and chief financial officer may have other responsibilities related to financial management but are not specifically assigned to generate reports.

50. Telling the accountant not to record overtime paid from the cash box to employees working weekends is violating the ____ concept.

Ongoing concern

Entity

Full disclosure

Time period

The concept of full disclosure requires that all relevant and material information be disclosed in the financial statements. In this scenario, instructing the accountant not to record overtime paid from the cash box to employees working weekends is a violation of the full disclosure concept because it hides important information about the company's expenses and payments to employees. By not disclosing this information, the financial statements would not provide a complete and accurate representation of the company's financial position and performance.

Explanation

The concept of full disclosure requires that all relevant and material information be disclosed in the financial statements. In this scenario, instructing the accountant not to record overtime paid from the cash box to employees working weekends is a violation of the full disclosure concept because it hides important information about the company's expenses and payments to employees. By not disclosing this information, the financial statements would not provide a complete and accurate representation of the company's financial position and performance.

51. Directing the accountant to move from a January 1 date to a June 30 fiscal year date in order to minimize the negative image possibly created by an anticipated loss violates the ____ concept.

Ongoing concern

Time period

Conservation

Entity

The concept of time period in accounting refers to the practice of dividing the financial information into specific periods, such as months, quarters, or years, in order to provide timely and relevant information to users. In this scenario, directing the accountant to change the fiscal year from January 1 to June 30 is a violation of the time period concept because it disrupts the consistency and comparability of financial information. This change may be aimed at minimizing the negative image caused by an anticipated loss, but it compromises the accuracy and reliability of financial reporting.

Explanation

The concept of time period in accounting refers to the practice of dividing the financial information into specific periods, such as months, quarters, or years, in order to provide timely and relevant information to users. In this scenario, directing the accountant to change the fiscal year from January 1 to June 30 is a violation of the time period concept because it disrupts the consistency and comparability of financial information. This change may be aimed at minimizing the negative image caused by an anticipated loss, but it compromises the accuracy and reliability of financial reporting.

52. When errors are discovered in other journals, they can be corrected by entries into the ____.

Support records

Ledger

Cash receipts journal

General journal

When errors are discovered in other journals, they can be corrected by entries into the general journal. The general journal is a book of original entry where all transactions are recorded in chronological order. It is used to correct errors or make adjustments that cannot be made in the original journal. By making entries in the general journal, the errors can be rectified and the financial records can be accurately updated.

Explanation

When errors are discovered in other journals, they can be corrected by entries into the general journal. The general journal is a book of original entry where all transactions are recorded in chronological order. It is used to correct errors or make adjustments that cannot be made in the original journal. By making entries in the general journal, the errors can be rectified and the financial records can be accurately updated.

53. The administrator decides to offer newer forms of physical therapy that reduce use of currently used physical therapy methods. She has ___ the current methods.

Reduced the competitive advantage of

Cannibalized

Reduced

Unsurped

The correct answer is "Cannibalized". In this context, cannibalized means that the newer forms of physical therapy have reduced the use and effectiveness of the currently used physical therapy methods. This implies that the newer methods have taken away the market share and advantages previously held by the current methods.

Explanation

The correct answer is "Cannibalized". In this context, cannibalized means that the newer forms of physical therapy have reduced the use and effectiveness of the currently used physical therapy methods. This implies that the newer methods have taken away the market share and advantages previously held by the current methods.

54. The administrator asks the business manager to divide the net income after any taxes by the noncurrent liabilities + owner's equity. He wants the ___.

Best income estimate

Return on invested capital estimate

Probability estimate

Best productivity achievable

The administrator is asking the business manager to calculate the return on invested capital (ROIC) estimate. ROIC is a financial metric that measures the profitability of a company by comparing its net income after taxes to the sum of its noncurrent liabilities and owner's equity. It is used to assess how effectively a company is utilizing its capital to generate profits. By dividing the net income after taxes by the noncurrent liabilities + owner's equity, the business manager can calculate the ROIC estimate, which will provide insight into the company's performance and profitability.

Explanation

The administrator is asking the business manager to calculate the return on invested capital (ROIC) estimate. ROIC is a financial metric that measures the profitability of a company by comparing its net income after taxes to the sum of its noncurrent liabilities and owner's equity. It is used to assess how effectively a company is utilizing its capital to generate profits. By dividing the net income after taxes by the noncurrent liabilities + owner's equity, the business manager can calculate the ROIC estimate, which will provide insight into the company's performance and profitability.

55. Using several differing depreciation schedules for a single piece of equipment is ___ as an accounting behavior.

Unacceptable

Quite acceptable

Risky

Illegal

Using several differing depreciation schedules for a single piece of equipment is quite acceptable as an accounting behavior. This is because different depreciation schedules can be used based on the specific circumstances of the equipment, such as its expected useful life, salvage value, and method of depreciation. It allows for a more accurate reflection of the asset's value over time and aligns with the principle of matching expenses with revenues. As long as these schedules are applied consistently and in accordance with accounting standards, it is considered acceptable practice.

Explanation

Using several differing depreciation schedules for a single piece of equipment is quite acceptable as an accounting behavior. This is because different depreciation schedules can be used based on the specific circumstances of the equipment, such as its expected useful life, salvage value, and method of depreciation. It allows for a more accurate reflection of the asset's value over time and aligns with the principle of matching expenses with revenues. As long as these schedules are applied consistently and in accordance with accounting standards, it is considered acceptable practice.

56. An owner who takes unrecorded cash from the facility daily cash intake to purchase a laptop for his daughter to use at college has violated the ____ concept.

Consistency

Entity

Time period

Objective evidence

The owner's action of taking unrecorded cash from the facility's daily cash intake for personal use violates the entity concept. The entity concept states that the business and its owner are separate entities, and the owner should not mix personal and business finances. By using the cash for personal purposes, the owner is disregarding this concept and treating the business's assets as their own.

Explanation

The owner's action of taking unrecorded cash from the facility's daily cash intake for personal use violates the entity concept. The entity concept states that the business and its owner are separate entities, and the owner should not mix personal and business finances. By using the cash for personal purposes, the owner is disregarding this concept and treating the business's assets as their own.

57. A 12-year old facility, largely out of debt, has $334,693 in operating revenues and $339,078 in operating expenses, yielding a net operating margin ratio of _. The owners of this facility would likely feel this to be _.

.013 Unacceptable

.013 Acceptable

8.013 Unacceptable

8.013 Acceptable

The net operating margin ratio is calculated by dividing the operating income (revenues minus expenses) by the operating revenues. In this case, the net operating margin ratio is 339,078 - 334,693 = $4,385 / $334,693 = 0.013, or 1.3%. A low net operating margin ratio indicates that the facility is not generating much profit from its operations. Therefore, the owners of this facility would likely feel this to be unacceptable.

Explanation

The net operating margin ratio is calculated by dividing the operating income (revenues minus expenses) by the operating revenues. In this case, the net operating margin ratio is 339,078 - 334,693 = $4,385 / $334,693 = 0.013, or 1.3%. A low net operating margin ratio indicates that the facility is not generating much profit from its operations. Therefore, the owners of this facility would likely feel this to be unacceptable.

58. When the amount of current assets remaining after current liabilities have been subtracted is calculated, the administrator has an idea of the ____ available to be spent.

Capital

Net worth

Working capital

Assets

Working capital refers to the amount of current assets that remain after deducting current liabilities. It represents the funds available to a company for day-to-day operations and can be used to meet short-term obligations. By calculating the working capital, the administrator can determine the amount of money that can be spent on various expenses and investments. Therefore, the correct answer is working capital.

Explanation

Working capital refers to the amount of current assets that remain after deducting current liabilities. It represents the funds available to a company for day-to-day operations and can be used to meet short-term obligations. By calculating the working capital, the administrator can determine the amount of money that can be spent on various expenses and investments. Therefore, the correct answer is working capital.

59. A set of records that lists each monetary transaction of the facility is normally referred to as ____.

The books

Financial statements

Monetary records

Income and revenue statement

The term "the books" is commonly used to refer to a set of records that lists each monetary transaction of a facility. It is a widely accepted term in accounting and finance to describe the comprehensive record-keeping system that tracks the financial activities of an organization. The books include all the necessary information to prepare financial statements and analyze the financial health of the facility.

Explanation

The term "the books" is commonly used to refer to a set of records that lists each monetary transaction of a facility. It is a widely accepted term in accounting and finance to describe the comprehensive record-keeping system that tracks the financial activities of an organization. The books include all the necessary information to prepare financial statements and analyze the financial health of the facility.

60. Bills from suppliers of foodstuffs or office supplies, or janitorial services contractors are normally classified as among the ____.

Current liabilities

Accounts due

Invoices

Bills of lading

Bills from suppliers of foodstuffs or office supplies, or janitorial services contractors are normally classified as current liabilities because they represent debts that are expected to be paid within a short period of time, usually within one year. Current liabilities are obligations that a company owes and must settle in the near future, typically through the use of current assets or by incurring new liabilities. Therefore, bills from suppliers and contractors fall under this category as they are expected to be paid off in the short term.

Explanation

Bills from suppliers of foodstuffs or office supplies, or janitorial services contractors are normally classified as current liabilities because they represent debts that are expected to be paid within a short period of time, usually within one year. Current liabilities are obligations that a company owes and must settle in the near future, typically through the use of current assets or by incurring new liabilities. Therefore, bills from suppliers and contractors fall under this category as they are expected to be paid off in the short term.

61. If the administrator asks the accountant for the journals, the administrator wants to look at ____.

The original entries

The assets

The debits

Current summaries of income and outgo

If the administrator asks the accountant for the journals, it means that the administrator wants to examine the original entries. Journals are used to record all financial transactions in chronological order, including debits and credits. By reviewing the journals, the administrator can gain a comprehensive understanding of the financial activities and ensure accuracy in the accounting records.

Explanation

If the administrator asks the accountant for the journals, it means that the administrator wants to examine the original entries. Journals are used to record all financial transactions in chronological order, including debits and credits. By reviewing the journals, the administrator can gain a comprehensive understanding of the financial activities and ensure accuracy in the accounting records.

62. A summary of the nursing home's financial well-being within a time period is normally referred to as ____.

The financial statements

Profit and loss

Notes to changes in financial condition

Statements of change

The financial statements provide a summary of the nursing home's financial well-being within a specific time period. These statements include information such as the balance sheet, income statement, and cash flow statement, which help to assess the financial health and performance of the nursing home. By analyzing these statements, stakeholders can evaluate the organization's profitability, liquidity, and overall financial condition.

Explanation

The financial statements provide a summary of the nursing home's financial well-being within a specific time period. These statements include information such as the balance sheet, income statement, and cash flow statement, which help to assess the financial health and performance of the nursing home. By analyzing these statements, stakeholders can evaluate the organization's profitability, liquidity, and overall financial condition.

63. Pieces of paper indicating money owed to or by the facility, bank statements, and similar pieces of paper or its electronic equivalent are known as ____.

Paper trail

Source documents

Bill of lading

Records

Source documents are pieces of paper or electronic records that indicate money owed to or by a facility, such as bank statements or invoices. They provide evidence of transactions and serve as a paper trail for financial records. Therefore, the correct answer is source documents.

Explanation

Source documents are pieces of paper or electronic records that indicate money owed to or by a facility, such as bank statements or invoices. They provide evidence of transactions and serve as a paper trail for financial records. Therefore, the correct answer is source documents.

64. Ratios, to be truly useful, should be ____.

Used to measure over time

Compared with industry averages over time

In simple mathematical terms

Compared to expected future ratios

To ensure that ratios are truly useful, they should be compared with industry averages over time. This comparison allows businesses to assess their performance relative to their competitors and track any changes or trends in their financial ratios. By comparing ratios with industry averages, companies can identify areas where they are underperforming or outperforming and make informed decisions to improve their financial position. This analysis provides a benchmark for evaluating a company's financial health and helps in making strategic decisions based on industry standards.

Explanation

To ensure that ratios are truly useful, they should be compared with industry averages over time. This comparison allows businesses to assess their performance relative to their competitors and track any changes or trends in their financial ratios. By comparing ratios with industry averages, companies can identify areas where they are underperforming or outperforming and make informed decisions to improve their financial position. This analysis provides a benchmark for evaluating a company's financial health and helps in making strategic decisions based on industry standards.

65. A method of measuring the potential profitability of an investment, calculated by dividing the net income by the investment is the ___.

Activity-based costing

ARR (accounting rate of return)

Profit ratio

Profit assurance calculation

The correct answer is ARR (accounting rate of return). ARR is a method used to measure the potential profitability of an investment. It is calculated by dividing the net income generated by the investment by the initial investment cost. This ratio provides insight into the rate of return that can be expected from the investment and helps investors assess its profitability.

Explanation

The correct answer is ARR (accounting rate of return). ARR is a method used to measure the potential profitability of an investment. It is calculated by dividing the net income generated by the investment by the initial investment cost. This ratio provides insight into the rate of return that can be expected from the investment and helps investors assess its profitability.

66. The concept that, since capital assets will not be liquidated any time soon, their current market value is not directly relevant, relates to the ongoing concern concept and is known as ____.

Historic cost

Current cost

Original cost

Projected Value

The concept that the current market value of capital assets is not directly relevant because they are not going to be sold or liquidated in the near future is known as historic cost. Historic cost refers to the original cost of acquiring the asset, which is recorded on the balance sheet and does not change over time, regardless of any fluctuations in the market value. This concept is based on the assumption that the company will continue to operate as an ongoing concern and the assets will be used for their intended purpose rather than being sold for profit.

Explanation

The concept that the current market value of capital assets is not directly relevant because they are not going to be sold or liquidated in the near future is known as historic cost. Historic cost refers to the original cost of acquiring the asset, which is recorded on the balance sheet and does not change over time, regardless of any fluctuations in the market value. This concept is based on the assumption that the company will continue to operate as an ongoing concern and the assets will be used for their intended purpose rather than being sold for profit.

67. In general, the ownership patterns for U.S. nursing facilities in 2008 ____.

Were unstable

Varied widely from state to state

Were somewhat stable

Were unchanged from 89 years earlier

The correct answer is "Were somewhat stable." This means that the ownership patterns for U.S. nursing facilities in 2008 were not completely stable, but they also were not highly unstable. There may have been some changes or variations in ownership, but overall, there was a degree of stability in the ownership patterns during that time.

Explanation

The correct answer is "Were somewhat stable." This means that the ownership patterns for U.S. nursing facilities in 2008 were not completely stable, but they also were not highly unstable. There may have been some changes or variations in ownership, but overall, there was a degree of stability in the ownership patterns during that time.

68. If the administrator asked the bookkeeper for a list containing every account in the facility, the bookkeeper would hand the administrator the ____.

Books

Financial Report

Chart of accounts

General journal

The correct answer is "Chart of accounts." A chart of accounts is a comprehensive list of all the accounts used by a company or organization to record financial transactions. It provides a systematic and organized structure for categorizing and classifying various accounts, such as assets, liabilities, equity, revenue, and expenses. By providing this list to the administrator, the bookkeeper would be giving them a complete overview of all the accounts in the facility.

Explanation

The correct answer is "Chart of accounts." A chart of accounts is a comprehensive list of all the accounts used by a company or organization to record financial transactions. It provides a systematic and organized structure for categorizing and classifying various accounts, such as assets, liabilities, equity, revenue, and expenses. By providing this list to the administrator, the bookkeeper would be giving them a complete overview of all the accounts in the facility.

69. The chain "buys back" a portion of its outstanding stock by giving one new share in place of each four previously held shares. The chain has accomplished a/an ___.

Reverse split

Buy-back

Buy-down

Illegal move

A reverse split occurs when a company reduces the number of shares outstanding by consolidating multiple shares into one. In this case, the chain is buying back a portion of its outstanding stock and giving one new share for every four previously held shares. This means that the number of shares will decrease, but the value of each share will increase. Therefore, the correct answer is reverse split.

Explanation

A reverse split occurs when a company reduces the number of shares outstanding by consolidating multiple shares into one. In this case, the chain is buying back a portion of its outstanding stock and giving one new share for every four previously held shares. This means that the number of shares will decrease, but the value of each share will increase. Therefore, the correct answer is reverse split.

70. It is difficult to recognize items such as depreciation and prepaid insurance in the ____ system of accounting.

Accrual

Simplified

Cash

Income and expense

In a cash system of accounting, only transactions involving actual cash inflows and outflows are recorded. Items such as depreciation and prepaid insurance are not recognized in this system because they do not involve immediate cash transactions. Depreciation is the allocation of the cost of an asset over its useful life, and prepaid insurance represents an advance payment for future coverage. These items are typically recognized in accrual accounting, where transactions are recorded when they occur, regardless of cash flow. Therefore, it is difficult to recognize depreciation and prepaid insurance in a cash system of accounting.

Explanation

In a cash system of accounting, only transactions involving actual cash inflows and outflows are recorded. Items such as depreciation and prepaid insurance are not recognized in this system because they do not involve immediate cash transactions. Depreciation is the allocation of the cost of an asset over its useful life, and prepaid insurance represents an advance payment for future coverage. These items are typically recognized in accrual accounting, where transactions are recorded when they occur, regardless of cash flow. Therefore, it is difficult to recognize depreciation and prepaid insurance in a cash system of accounting.

71. The instrument that creates a corporation under the laws of a state is known as the ___.

Registration

Certificate

Statement of incorporation

Articles of incorporation

The instrument that creates a corporation under the laws of a state is known as the "Articles of incorporation." This document is filed with the state government to officially establish the corporation. It includes important information such as the corporation's name, purpose, registered agent, and the number and types of shares it is authorized to issue. The Articles of Incorporation serve as the legal foundation for the corporation and outline its structure and governance.

Explanation

The instrument that creates a corporation under the laws of a state is known as the "Articles of incorporation." This document is filed with the state government to officially establish the corporation. It includes important information such as the corporation's name, purpose, registered agent, and the number and types of shares it is authorized to issue. The Articles of Incorporation serve as the legal foundation for the corporation and outline its structure and governance.

72. For in-facility services such as physical therapy, it is important to calculate the ___ cost in order to better analyze the cost effectiveness of such services.

Total

Break-Even

Minimum

Maximum

In order to analyze the cost effectiveness of in-facility services like physical therapy, it is crucial to calculate the break-even cost. This cost represents the point at which the revenue generated from providing the services equals the total costs incurred. By determining the break-even point, healthcare providers can assess whether the services are financially viable and if they are generating enough revenue to cover their expenses. This analysis helps in making informed decisions about the cost effectiveness and profitability of offering such services.

Explanation

In order to analyze the cost effectiveness of in-facility services like physical therapy, it is crucial to calculate the break-even cost. This cost represents the point at which the revenue generated from providing the services equals the total costs incurred. By determining the break-even point, healthcare providers can assess whether the services are financially viable and if they are generating enough revenue to cover their expenses. This analysis helps in making informed decisions about the cost effectiveness and profitability of offering such services.

73. When governments use their powers to keep the price either above or below the equilibrium point it is known as ___.

Market interference

Government control

Price controls

Government rule

Price controls refer to the government's use of its powers to set or manipulate prices in the market, either above or below the equilibrium point. This intervention can be done through various methods such as price ceilings or price floors. The purpose of price controls is typically to regulate and stabilize prices, protect consumers from high prices, or ensure fair competition. However, they can also have unintended consequences such as shortages, black markets, or reduced incentives for producers.

Explanation

Price controls refer to the government's use of its powers to set or manipulate prices in the market, either above or below the equilibrium point. This intervention can be done through various methods such as price ceilings or price floors. The purpose of price controls is typically to regulate and stabilize prices, protect consumers from high prices, or ensure fair competition. However, they can also have unintended consequences such as shortages, black markets, or reduced incentives for producers.

74. A revision of an accounting forecast or assumption about the facility's expected or experienced performance is a/an ___.

Change in accounting estimate

Change in performance

Review

Accountant's revision

A revision of an accounting forecast or assumption about the facility's expected or experienced performance is referred to as a change in accounting estimate. This means that there has been a modification in the estimated financial figures or assumptions that were previously made for the facility's performance. This change could be due to new information, developments, or a reassessment of the situation. It is an important aspect of accounting as it ensures that the financial statements reflect the most accurate and up-to-date information.

Explanation

A revision of an accounting forecast or assumption about the facility's expected or experienced performance is referred to as a change in accounting estimate. This means that there has been a modification in the estimated financial figures or assumptions that were previously made for the facility's performance. This change could be due to new information, developments, or a reassessment of the situation. It is an important aspect of accounting as it ensures that the financial statements reflect the most accurate and up-to-date information.

75. One practical reason for using straight line depreciation is that ___.

It brings the fastest write-off

It is the only fully acceptable method

Most third-party payers require it

It has the approval of the IRS

One practical reason for using straight line depreciation is that most third-party payers require it. This means that when a company is reporting its financial statements to these payers, they need to use straight line depreciation in order to comply with their requirements. This ensures that the company's financial statements are accurate and consistent with industry standards, making it easier for third-party payers to assess the company's financial health and make informed decisions.

Explanation

One practical reason for using straight line depreciation is that most third-party payers require it. This means that when a company is reporting its financial statements to these payers, they need to use straight line depreciation in order to comply with their requirements. This ensures that the company's financial statements are accurate and consistent with industry standards, making it easier for third-party payers to assess the company's financial health and make informed decisions.

76. The administrator has borrowed cash for an agreed upon purpose between a lender and borrower. He now has a ___.

Legal obligation

Bond

Note

Capital asset

The term "note" refers to a written promise to repay a debt. In this scenario, the administrator has borrowed cash, indicating that there is a debt owed. Therefore, the correct answer is "Note" as it represents the legal obligation of the administrator to repay the borrowed cash.

Explanation

The term "note" refers to a written promise to repay a debt. In this scenario, the administrator has borrowed cash, indicating that there is a debt owed. Therefore, the correct answer is "Note" as it represents the legal obligation of the administrator to repay the borrowed cash.

77. Allowing the facility to accurately measure revenues earned after expenses have been paid or losses incurred by matching revenues and expenses for each time period is the advantage of the ____ system of accounting.

Acccrual

Cash

Income and loss

Advanced electronic

The accrual system of accounting allows for the accurate measurement of revenues earned after expenses have been paid or losses incurred by matching revenues and expenses for each time period. This means that revenues and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid. This provides a more accurate representation of the financial performance of a business over a specific period of time.

Explanation

The accrual system of accounting allows for the accurate measurement of revenues earned after expenses have been paid or losses incurred by matching revenues and expenses for each time period. This means that revenues and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid. This provides a more accurate representation of the financial performance of a business over a specific period of time.

78. A 1-year-old, 120-bed for-profit facility with at $2,500,000 mortgage at 7.4% reports a net operating margin before depreciation of $25,000. In today's financial market, the owners would likely be ___.

Very pleased

Very displeased

Seeking to sell the facility as a result

Seeking to refinance as a result

The owners would likely be very pleased because the facility has a positive net operating margin before depreciation. This means that the facility is generating a profit after all operating expenses are deducted. Additionally, the facility has a mortgage, but the profit generated is enough to cover the mortgage payments and still have a positive net income. This indicates that the facility is financially stable and successful, which would make the owners happy.

Explanation

The owners would likely be very pleased because the facility has a positive net operating margin before depreciation. This means that the facility is generating a profit after all operating expenses are deducted. Additionally, the facility has a mortgage, but the profit generated is enough to cover the mortgage payments and still have a positive net income. This indicates that the facility is financially stable and successful, which would make the owners happy.

79. Trends and patterns in the operation of a nursing facility can best be obtained by doing ___.

Ratio analyses

Vertical analyses

Ratio and vertical analyses over time

Ratio and vertical analyses

By conducting ratio and vertical analyses over time, one can obtain the most comprehensive and accurate understanding of trends and patterns in the operation of a nursing facility. Ratio analysis involves comparing financial ratios such as liquidity, profitability, and efficiency over different periods, providing insights into the facility's financial health and performance. Vertical analysis, on the other hand, involves analyzing the components of financial statements as a percentage of a base figure, allowing for a deeper understanding of the facility's financial structure and trends. By combining these two analyses over time, a more comprehensive understanding of the facility's operations can be obtained.

Explanation

By conducting ratio and vertical analyses over time, one can obtain the most comprehensive and accurate understanding of trends and patterns in the operation of a nursing facility. Ratio analysis involves comparing financial ratios such as liquidity, profitability, and efficiency over different periods, providing insights into the facility's financial health and performance. Vertical analysis, on the other hand, involves analyzing the components of financial statements as a percentage of a base figure, allowing for a deeper understanding of the facility's financial structure and trends. By combining these two analyses over time, a more comprehensive understanding of the facility's operations can be obtained.

80. In order to develop a reasonable estimate of income and expenses for a coming time period, it is important to do both a/an _ budget and a _ budget.

Capital cash

Expense revenue

Expense balanced

Cash capital

To develop a reasonable estimate of income and expenses for a coming time period, it is important to do both an expense budget and a revenue budget. An expense budget helps in predicting and planning for the expenses that will be incurred during the time period, while a revenue budget helps in estimating the income or revenue that will be generated. By considering both budgets, one can have a comprehensive understanding of the financial situation and make informed decisions regarding spending and earning.

Explanation

To develop a reasonable estimate of income and expenses for a coming time period, it is important to do both an expense budget and a revenue budget. An expense budget helps in predicting and planning for the expenses that will be incurred during the time period, while a revenue budget helps in estimating the income or revenue that will be generated. By considering both budgets, one can have a comprehensive understanding of the financial situation and make informed decisions regarding spending and earning.

81. A financial analysis that yields to the administrator or representative picture of the entire expense of providing a service (e.g., offering adult day care services) is known as ___.

Value analysis

Revenue analysis

Cost finding

Center analysis

Cost finding refers to a financial analysis that provides a comprehensive view of the total expenses involved in offering a service, such as adult day care services. It involves identifying and quantifying all the costs associated with providing the service, including direct costs (such as labor, supplies, and equipment) and indirect costs (such as overhead and administrative expenses). Cost finding helps administrators or representatives understand the true cost of providing the service and make informed decisions regarding pricing, resource allocation, and financial planning.

Explanation

Cost finding refers to a financial analysis that provides a comprehensive view of the total expenses involved in offering a service, such as adult day care services. It involves identifying and quantifying all the costs associated with providing the service, including direct costs (such as labor, supplies, and equipment) and indirect costs (such as overhead and administrative expenses). Cost finding helps administrators or representatives understand the true cost of providing the service and make informed decisions regarding pricing, resource allocation, and financial planning.

82. A market that is so competitive that all its participants have virtually no control over price is known as ___.

Niche marketing

No holds barred competition

Perfect competition

Imperfect markets

Perfect competition is a market structure where there are many buyers and sellers, homogeneous products, perfect information, and no barriers to entry or exit. In perfect competition, no individual buyer or seller has the power to influence the market price. This means that all participants in the market are price takers, meaning they have virtually no control over price. Therefore, the correct answer is perfect competition.

Explanation

Perfect competition is a market structure where there are many buyers and sellers, homogeneous products, perfect information, and no barriers to entry or exit. In perfect competition, no individual buyer or seller has the power to influence the market price. This means that all participants in the market are price takers, meaning they have virtually no control over price. Therefore, the correct answer is perfect competition.

83. Short-term securities (2 days to 270 days) issued by corporations, banks, and other borrowing institutions to raise short-term working capital is known as ___.

Securities fraud

Commercial paper

Short-term bonds

Notes payable

Commercial paper refers to short-term securities issued by corporations, banks, and other borrowing institutions to raise short-term working capital. It is a form of unsecured promissory note that is typically issued for a period of 2 days to 270 days. Unlike traditional bonds, commercial paper does not require collateral and is often used by large, creditworthy companies to meet their short-term funding needs. This type of security is commonly traded in the money market and is considered a relatively safe investment due to the creditworthiness of the issuers.

Explanation

Commercial paper refers to short-term securities issued by corporations, banks, and other borrowing institutions to raise short-term working capital. It is a form of unsecured promissory note that is typically issued for a period of 2 days to 270 days. Unlike traditional bonds, commercial paper does not require collateral and is often used by large, creditworthy companies to meet their short-term funding needs. This type of security is commonly traded in the money market and is considered a relatively safe investment due to the creditworthiness of the issuers.

84. Instructing the financial manager to record assets at current market value and to not record patient bills expected to become uncollectible violates the ____ concept.

Entity

Good faith

Time period

Consistency

The concept of consistency in accounting states that financial information should be recorded and reported in a consistent manner over time. In this case, instructing the financial manager to record assets at current market value and not record patient bills expected to become uncollectible would result in a violation of consistency. This is because the financial manager is deviating from the usual and consistent practice of recording assets at their historical cost and recognizing potential bad debts.

Explanation

The concept of consistency in accounting states that financial information should be recorded and reported in a consistent manner over time. In this case, instructing the financial manager to record assets at current market value and not record patient bills expected to become uncollectible would result in a violation of consistency. This is because the financial manager is deviating from the usual and consistent practice of recording assets at their historical cost and recognizing potential bad debts.

85. The certified public accountant's end of year report for a 15-year old, 120-bed for-profit facility with no debt shows an excess of income over expenses of $95,000. The owners would likely be ____.

Very pleased with the facility performance

Very displeased with the facility performance

Generally satisfied

Neutral

The owners would likely be very displeased with the facility performance because even though the facility has no debt and a 15-year history, the excess of income over expenses is only $95,000. This amount may be considered low for a 120-bed for-profit facility, indicating that the facility may not be generating enough revenue or controlling expenses effectively.

Explanation

The owners would likely be very displeased with the facility performance because even though the facility has no debt and a 15-year history, the excess of income over expenses is only $95,000. This amount may be considered low for a 120-bed for-profit facility, indicating that the facility may not be generating enough revenue or controlling expenses effectively.

86. A facility with long-term debt of $4,000,000 and total equity of $3,000,000 has a debt to equity ratio of _, which is _ the industry average.

1.33 Considerably above

1.33 Considerably below

2.33 Far above

2.33 Well below

The debt to equity ratio is calculated by dividing the long-term debt by the total equity. In this case, the facility has a debt to equity ratio of 1.33, which means that the long-term debt is 1.33 times the total equity. This ratio is considered considerably above the industry average, indicating that the facility has a higher level of debt relative to its equity compared to other companies in the industry.

Explanation

The debt to equity ratio is calculated by dividing the long-term debt by the total equity. In this case, the facility has a debt to equity ratio of 1.33, which means that the long-term debt is 1.33 times the total equity. This ratio is considered considerably above the industry average, indicating that the facility has a higher level of debt relative to its equity compared to other companies in the industry.

87. Using accrual accounting, purchase of a 6-month supply of provisions would be entered into the ____.

Billings journal

Cash receipts journal

General journal

Credit side of the ledger

In accrual accounting, the purchase of a 6-month supply of provisions would be entered into the general journal. The general journal is used to record all types of transactions, including purchases, sales, expenses, and other financial activities. It serves as a central record-keeping tool for all financial transactions and provides a complete and chronological overview of the company's financial activities. Therefore, entering the purchase of provisions in the general journal ensures that it is accurately recorded and included in the company's financial statements.

Explanation

In accrual accounting, the purchase of a 6-month supply of provisions would be entered into the general journal. The general journal is used to record all types of transactions, including purchases, sales, expenses, and other financial activities. It serves as a central record-keeping tool for all financial transactions and provides a complete and chronological overview of the company's financial activities. Therefore, entering the purchase of provisions in the general journal ensures that it is accurately recorded and included in the company's financial statements.

88. The use of LIFO (Last in first out) to price inventory during a period of inflation will have the effect of making the value of the goods remaining in inventory ___.

Higher

Lower

About the same

At market value

During a period of inflation, the use of LIFO (Last in first out) to price inventory will have the effect of making the value of the goods remaining in inventory lower. This is because LIFO assumes that the most recent inventory purchases are the first ones sold, which means that the older, lower-priced inventory remains in the inventory. As prices increase due to inflation, the cost of replacing inventory rises, resulting in a lower value for the remaining inventory.

Explanation

During a period of inflation, the use of LIFO (Last in first out) to price inventory will have the effect of making the value of the goods remaining in inventory lower. This is because LIFO assumes that the most recent inventory purchases are the first ones sold, which means that the older, lower-priced inventory remains in the inventory. As prices increase due to inflation, the cost of replacing inventory rises, resulting in a lower value for the remaining inventory.

89. The new administrator in a private pay for-profit facility is told by the accountant that the accounts receivable are $105,800 and the net operating revenues are $334,000. Upon calculating the average collection period ratio, which turns out to be _ days, the administrator should be _.

29 Pleased

29 Displeased

115 Pleased

115 Upset

The average collection period ratio is calculated by dividing the accounts receivable by the net operating revenues and multiplying by 365. In this case, the calculation would be (105,800 / 334,000) * 365 = 116.22 days. Since the answer given is 115 days, which is slightly lower than the calculated ratio, the administrator should be upset. This suggests that the facility's collection period is longer than expected, indicating potential issues with collecting payments from customers.

Explanation

The average collection period ratio is calculated by dividing the accounts receivable by the net operating revenues and multiplying by 365. In this case, the calculation would be (105,800 / 334,000) * 365 = 116.22 days. Since the answer given is 115 days, which is slightly lower than the calculated ratio, the administrator should be upset. This suggests that the facility's collection period is longer than expected, indicating potential issues with collecting payments from customers.

90. A method of determining the optimum amount of materials that needs to be ordered on a regular basis is known as the ____.

Best ordering method

Ordering queue

Economic order quantity

Inventory control procedure

Economic order quantity refers to the method of determining the optimum amount of materials that needs to be ordered on a regular basis. It takes into account factors such as ordering costs, carrying costs, and demand to calculate the most cost-effective quantity to order. This helps in minimizing inventory costs while ensuring that enough materials are available to meet customer demand.

Explanation

Economic order quantity refers to the method of determining the optimum amount of materials that needs to be ordered on a regular basis. It takes into account factors such as ordering costs, carrying costs, and demand to calculate the most cost-effective quantity to order. This helps in minimizing inventory costs while ensuring that enough materials are available to meet customer demand.

91. The chain issues stocks and bonds that can be converted into capital stock at some future date. They have issued ___.

Convertible bonds

Convertible securities

Quasi-bonds

Quasi-bonds and quasi-stocks

Convertible securities refer to financial instruments, such as stocks or bonds, that can be converted into capital stock at a future date. This means that the holder of these securities has the option to convert them into shares of the issuing company's stock. Therefore, the given statement suggests that the chain has issued convertible securities, which can be either stocks or bonds that can be converted into capital stock.

Explanation

Convertible securities refer to financial instruments, such as stocks or bonds, that can be converted into capital stock at a future date. This means that the holder of these securities has the option to convert them into shares of the issuing company's stock. Therefore, the given statement suggests that the chain has issued convertible securities, which can be either stocks or bonds that can be converted into capital stock.

92. If the administrator asks the accountant for a statement analyzing the financial position of the facility at the beginning of the fiscal year, the best statement to hand the administrator is the ____.

Statement of profit and loss

Statement of net worth

Balance sheet

General ledger

A balance sheet provides a snapshot of a company's financial position at a specific point in time, typically at the beginning or end of a fiscal year. It includes information about the company's assets, liabilities, and shareholders' equity. By handing the administrator a balance sheet, the accountant can provide a comprehensive overview of the facility's financial health and its ability to meet its financial obligations. This statement is more appropriate for analyzing the financial position of the facility compared to the other options provided.

Explanation

A balance sheet provides a snapshot of a company's financial position at a specific point in time, typically at the beginning or end of a fiscal year. It includes information about the company's assets, liabilities, and shareholders' equity. By handing the administrator a balance sheet, the accountant can provide a comprehensive overview of the facility's financial health and its ability to meet its financial obligations. This statement is more appropriate for analyzing the financial position of the facility compared to the other options provided.

93. An administrator who instructs the accountant to begin reporting facility finances by recording all expenditures and all receipts as they actually occur has decided to use the ____ system of accounting.

Cash

Implied

No-fault

Accrual

The administrator's decision to record all expenditures and receipts as they actually occur indicates that they are using the cash system of accounting. In this system, transactions are recognized and recorded when cash is received or paid out. This method provides a clear and immediate picture of the organization's cash flow and is commonly used by small businesses or those with simple financial transactions.

Explanation

The administrator's decision to record all expenditures and receipts as they actually occur indicates that they are using the cash system of accounting. In this system, transactions are recognized and recorded when cash is received or paid out. This method provides a clear and immediate picture of the organization's cash flow and is commonly used by small businesses or those with simple financial transactions.

94. The administrator holds a number of assets, such as bonds or easily sold stock, as investments. He has substantial ___.

Sources of income

Riches

Good investments

Cash equivalents

The correct answer is cash equivalents because cash equivalents refer to highly liquid assets that can be easily converted into cash, such as treasury bills, money market funds, or short-term government bonds. These investments provide the administrator with a high degree of liquidity and flexibility in managing their financial resources.

Explanation

The correct answer is cash equivalents because cash equivalents refer to highly liquid assets that can be easily converted into cash, such as treasury bills, money market funds, or short-term government bonds. These investments provide the administrator with a high degree of liquidity and flexibility in managing their financial resources.

95. Only when appropriate _ has been achieved can an accurate job of _ be accomplished.

Information gathering/cost setting

Cost finding/rate setting

Expense reporting/estimating income

Tax analysis/cost setting

The correct answer is Cost finding/rate setting. Cost finding refers to the process of determining the actual costs incurred in producing a product or providing a service. Rate setting, on the other hand, involves establishing the appropriate price or rate for that product or service based on the cost information gathered. Therefore, only when the accurate cost finding has been achieved can an accurate job of rate setting be accomplished.

Explanation

The correct answer is Cost finding/rate setting. Cost finding refers to the process of determining the actual costs incurred in producing a product or providing a service. Rate setting, on the other hand, involves establishing the appropriate price or rate for that product or service based on the cost information gathered. Therefore, only when the accurate cost finding has been achieved can an accurate job of rate setting be accomplished.

96. The facility has issued a debt obligation to pay a specific amount on a stated date. The facility has issued ___.

Letters of credit

Notes

Bonds

Financial instruments

The correct answer is Bonds. Bonds are a type of debt obligation issued by a facility to raise funds. They are a financial instrument that represents a loan made by an investor to the facility. Bonds have a specific amount that needs to be paid back on a stated date, which aligns with the given information in the question. Letters of credit, notes, and financial instruments are also financial terms, but they do not specifically refer to debt obligations with a fixed payment date like bonds do.

Explanation

The correct answer is Bonds. Bonds are a type of debt obligation issued by a facility to raise funds. They are a financial instrument that represents a loan made by an investor to the facility. Bonds have a specific amount that needs to be paid back on a stated date, which aligns with the given information in the question. Letters of credit, notes, and financial instruments are also financial terms, but they do not specifically refer to debt obligations with a fixed payment date like bonds do.

97. When the administrator asks the accountant for a summary of all debits and credits contained in the journals for the time period, the accountant should had the ____ to the administrator.

General journal

General ledger

Financial statements

Debits and credits listing

The general ledger is the appropriate document for the accountant to provide to the administrator when asked for a summary of all debits and credits contained in the journals for the time period. The general ledger contains all the accounts and their respective debits and credits, providing a comprehensive overview of the financial transactions. It is a primary tool for financial reporting and analysis.

Explanation

The general ledger is the appropriate document for the accountant to provide to the administrator when asked for a summary of all debits and credits contained in the journals for the time period. The general ledger contains all the accounts and their respective debits and credits, providing a comprehensive overview of the financial transactions. It is a primary tool for financial reporting and analysis.

98. When the chief financial officer identifies trends in measures of the facility's financial performance by comparing the same relationships for several time periods he is doing ____.

Comparison analysis

Time period analysis

Ratio analyses

Trade-off comparisons

The chief financial officer is performing ratio analyses when they compare trends in measures of the facility's financial performance over several time periods. Ratio analysis involves calculating and analyzing various financial ratios to assess the company's financial health and performance. By comparing these ratios over time, the CFO can identify trends and patterns that can help in making informed financial decisions and evaluating the company's overall financial performance.

Explanation

The chief financial officer is performing ratio analyses when they compare trends in measures of the facility's financial performance over several time periods. Ratio analysis involves calculating and analyzing various financial ratios to assess the company's financial health and performance. By comparing these ratios over time, the CFO can identify trends and patterns that can help in making informed financial decisions and evaluating the company's overall financial performance.

99. When the administrator asks the chief financial officer for a statement showing the ending balance of the revenue and expenses accounts, the CFO should hand the ____ to the administrator.

Income statement

Balance sheet

General ledger

General journal

The correct answer is the income statement. The income statement shows the revenue and expenses accounts and provides information about the company's financial performance over a specific period of time. It helps the administrator understand the ending balance of these accounts and assess the profitability of the company. The balance sheet, on the other hand, provides a snapshot of the company's financial position at a specific point in time. The general ledger and general journal are accounting records used to track and record financial transactions, but they do not provide the ending balance of revenue and expenses accounts specifically.

Explanation

The correct answer is the income statement. The income statement shows the revenue and expenses accounts and provides information about the company's financial performance over a specific period of time. It helps the administrator understand the ending balance of these accounts and assess the profitability of the company. The balance sheet, on the other hand, provides a snapshot of the company's financial position at a specific point in time. The general ledger and general journal are accounting records used to track and record financial transactions, but they do not provide the ending balance of revenue and expenses accounts specifically.

100. Because income and expenses vary from time period to time period, it is desirable to project a ___ budget.

Cash

Balanced

Forecasted

Capital

A cash budget is desirable because it takes into account the fluctuations in income and expenses over time. It helps in projecting the cash inflows and outflows accurately, allowing for better financial planning and management. A cash budget provides a clear picture of the available funds and helps in making informed decisions regarding investments, savings, and expenditures. It ensures that there is enough cash on hand to cover expenses and avoid any cash flow problems.

Explanation

A cash budget is desirable because it takes into account the fluctuations in income and expenses over time. It helps in projecting the cash inflows and outflows accurately, allowing for better financial planning and management. A cash budget provides a clear picture of the available funds and helps in making informed decisions regarding investments, savings, and expenditures. It ensures that there is enough cash on hand to cover expenses and avoid any cash flow problems.

Nursing Home Administration - Finance and Business Quiz

1. The salary of the director of nurses and the administrator are examples of ___ costs.

2.

What first name or nickname would you like us to use?

2. A useful form that summarizes the facility's occupancy, listing daily admissions, discharges, and transfers is known as the ___.

3. The income statement shows whether ____ were sufficient to cover expenses.

4. The portion of a brand in the form of a symbol, design, or distinctive coloring or letter, also called a logo, is an organization's ___.

5. Making a debit and a credit entry for each transaction is known as the ____ system of accounting.

6. Things owned by the facility are normally referred to as ____.

7. To safeguard the finances of a facility, procedures should be arranged to establish a system of ___ so that employees review each other's financial activities.

8. The accountant, upon successfully bringing the expense and revenue accounts to zero, has successfully ____.

9. Congress' purpose for passing accelerated depreciation was to ___ of new facilities.

10. Nursing and physical therapy are normally thought of as ___ centers.

11. When the financial manager classifies an expense as an asset because it benefits the facility for more than 1 year he has ___ the expense.

12. The largest directly controllable cost for the average administrator is ____.

13. Payroll deductions are subtracted from ___ to arrive at the employee's ___ pay.

14. When asked whether funds are readily available for a $75,000 purchase and the accountant responds that the net worth is well over $800,000 and to go ahead with the purchase, the administrator should ____.

15. At the end of a time period, when debits do not match credits exactly, the accountant can first assume an error has been made in ___.

16. A financial statement in which the assets must equal the liability and capital accounts is known as the ____.

17. Responsibility and blame for overspending in the department of nursing and in food services is typically assigned by the owners to the ____.

18. Land ___ is a depreciable asset.

19. Any possession of the facility which will be or could be turned into cash within 12 months is a ____.

20. The staff person responsible for assuring that the business office runs smoothly is, in the final analysis, ____.

21. At the end of a time period, total expenses are subtracted from total revenues to compute the ____.

22. Plans for expenditures for buildings, major equipment, and the like are normally part of the ___ budget.

23. Funds that have been put into the facility by owners or others, and retained earnings that have been put back into the facility are usually included when calculating the ____.

24. Upon discovering that the new accountant had set the actual purchase price paid (e.g., no tax, delivery, or similar costs) for the assets to be depreciated, the facility administrator would normally feel the accountant was ___.

25. Medical supplies, food supplies, and postage for billing residents are ___ costs.

26. The primary purpose of the Generally Accepted Accounting Principles is to ____.

27. Things owed by the facility, its obligations, are normally referred to as ____.

29. Under double-entry bookkeeping, when a bill is sent to Ms. Jones for $3,000 for the past month's care, the bookkeeper would normally record $3,000 in the debit column as an increase in assets and ____.

30. In a facility having high fixed costs, the pressure to keep beds filled is ___ in facilities with low fixed costs.

31. The GAAPS's do not normally require financial statements prepared for general distribution to include ____.

32. A facility has current assets of $403,898 and current liabilities of $367,000. Its current ratio is ____.

33. Allowing the bookkeeper to destroy vouchers showing payments made for meals to employees once these are recorded may violate the ___ concept.

34. The administrator seeks to be licensed without having to meet all the conditions new entrants would have to meet. She seeks to be ___.

35. Under accrual accounting, when the accountant shows the amount of medical supplies used during a month in the cash disbursements journal and the general journal the bookkeeper has made ____.

36. Depreciation is an expense associated with the use of ____.

37. At the end of each year for facilities participating in Medicare, a Medicare Cost Reconciliation settlement occurs in which ___.

38. As a practical matter, most owners do not fund depreciation and treat it as ___.

39. Perhaps the only way to maintain an accurate count of supplies consumed and those remaining is to use ___.

40. Assets that can be capitalized or depreciated differ from other assets of a facility in that they are used in operations for more than ___ and will not be converted into ___ within the year.

41. The accountant has listed the new building annex, the new central air conditioning system, and the supplies for the next 6 months as capital expenses. The administrator should.

42. The three owners hold all the shares in the facility. They have a ___.

43. The new accountant informs the administrator that to simplify things, he has incorporated all purchases that will be paid for the next few years into the accounts payable journal. The administrator should ____.

44. Money invested in the facility, also known as the facility's net worth, is normally referred to as ____.

45. The administrator wishes to lease a building and acquire substantial property rights in the process. She seeks ___.

46. An administrator directing the accountant to record revenues when they are earned and expenses when they are incurred by matching revenues and expenses for each time period is the advantage of the ____ system of accounting.

47. When an administrator notes that there are $600,000 in notes payable on the financial reports, she knows these must be paid within ____.

48. The administrator asks the bank for an instrument stating that that bank has granted the holder the amount of credit equal to the face amount wants a ___.

49. Generating reports on the financial standing of the nursing facility is generally assigned to ____.

50. Telling the accountant not to record overtime paid from the cash box to employees working weekends is violating the ____ concept.

51. Directing the accountant to move from a January 1 date to a June 30 fiscal year date in order to minimize the negative image possibly created by an anticipated loss violates the ____ concept.

52. When errors are discovered in other journals, they can be corrected by entries into the ____.

53. The administrator decides to offer newer forms of physical therapy that reduce use of currently used physical therapy methods. She has ___ the current methods.

54. The administrator asks the business manager to divide the net income after any taxes by the noncurrent liabilities + owner's equity. He wants the ___.

55. Using several differing depreciation schedules for a single piece of equipment is ___ as an accounting behavior.

56. An owner who takes unrecorded cash from the facility daily cash intake to purchase a laptop for his daughter to use at college has violated the ____ concept.

57. A 12-year old facility, largely out of debt, has $334,693 in operating revenues and $339,078 in operating expenses, yielding a net operating margin ratio of ___. The owners of this facility would likely feel this to be ___.

58. When the amount of current assets remaining after current liabilities have been subtracted is calculated, the administrator has an idea of the ____ available to be spent.

59. A set of records that lists each monetary transaction of the facility is normally referred to as ____.

60. Bills from suppliers of foodstuffs or office supplies, or janitorial services contractors are normally classified as among the ____.

61. If the administrator asks the accountant for the journals, the administrator wants to look at ____.

62. A summary of the nursing home's financial well-being within a time period is normally referred to as ____.

63. Pieces of paper indicating money owed to or by the facility, bank statements, and similar pieces of paper or its electronic equivalent are known as ____.

64. Ratios, to be truly useful, should be ____.

65. A method of measuring the potential profitability of an investment, calculated by dividing the net income by the investment is the ___.

66. The concept that, since capital assets will not be liquidated any time soon, their current market value is not directly relevant, relates to the ongoing concern concept and is known as ____.

67. In general, the ownership patterns for U.S. nursing facilities in 2008 ____.

68. If the administrator asked the bookkeeper for a list containing every account in the facility, the bookkeeper would hand the administrator the ____.

69. The chain "buys back" a portion of its outstanding stock by giving one new share in place of each four previously held shares. The chain has accomplished a/an ___.

70. It is difficult to recognize items such as depreciation and prepaid insurance in the ____ system of accounting.

71. The instrument that creates a corporation under the laws of a state is known as the ___.

72. For in-facility services such as physical therapy, it is important to calculate the ___ cost in order to better analyze the cost effectiveness of such services.

73. When governments use their powers to keep the price either above or below the equilibrium point it is known as ___.

74. A revision of an accounting forecast or assumption about the facility's expected or experienced performance is a/an ___.

75. One practical reason for using straight line depreciation is that ___.

76. The administrator has borrowed cash for an agreed upon purpose between a lender and borrower. He now has a ___.

77. Allowing the facility to accurately measure revenues earned after expenses have been paid or losses incurred by matching revenues and expenses for each time period is the advantage of the ____ system of accounting.

78. A 1-year-old, 120-bed for-profit facility with at $2,500,000 mortgage at 7.4% reports a net operating margin before depreciation of $25,000. In today's financial market, the owners would likely be ___.

13. Payroll deductions are subtracted from _ to arrive at the employee's _ pay.

40. Assets that can be capitalized or depreciated differ from other assets of a facility in that they are used in operations for more than _ and will not be converted into _ within the year.

57. A 12-year old facility, largely out of debt, has $334,693 in operating revenues and $339,078 in operating expenses, yielding a net operating margin ratio of _. The owners of this facility would likely feel this to be _.

80. In order to develop a reasonable estimate of income and expenses for a coming time period, it is important to do both a/an _ budget and a _ budget.

86. A facility with long-term debt of $4,000,000 and total equity of $3,000,000 has a debt to equity ratio of _, which is _ the industry average.

89. The new administrator in a private pay for-profit facility is told by the accountant that the accounts receivable are $105,800 and the net operating revenues are $334,000. Upon calculating the average collection period ratio, which turns out to be _ days, the administrator should be _.

95. Only when appropriate _ has been achieved can an accurate job of _ be accomplished.