ACHE BOG MAIN EXAMINATION QUESTIONS WITH SOLUTIONS
GRADED A+
✔✔Crisis communications plan - ✔✔A process for disseminating information to all
organizational stakeholders in the event of an emergency.
✔✔Strategic alliance - ✔✔A long-term, formal, and mutually beneficial relationship
between two or more parties to pursue a set of agreed-upon goals or to meet a critical
business need while remaining independent organizations.
✔✔Market structure - ✔✔The organizational characteristics of a market that exert a
strategic influence on the intensity and form of competition.
✔✔Core competencies - ✔✔The internal activities and functions central to fulfilling an
organization's mission; strategically valuable, they are the essence of what makes the
organization unique in providing value to its customers.
✔✔Bargaining unit - ✔✔A group of employees recognized by the National Labor
Relations Board as an appropriate body for collective bargaining under the National
Labor Relations Act.
✔✔Product (or service) life cycle - ✔✔Four distinct but not wholly predictable stages
every product or service goes through: (1) introduction to the market; (2) growth in
utilization and revenue; (3) maturity, when utilization and revenue stabilize; and (4)
decline, when utilization and revenue start to fall and eventually become too little for the
product or service to remain viable.
✔✔Strategic action cycle (four stages) - ✔✔(1) Strategic planning, (2) budgeting, (3)
implementing strategy, and (4) controlling problems and monitoring progress.
✔✔SWOT analysis - ✔✔A tool for understanding an organization's strategic situation;
examines both an organization's internal environment (its strengths and weaknesses)
and its external environment its opportunities and threats).
✔✔Net assets - ✔✔The difference between assets and liabilities in a not-for-profit
organization, which represents the owner's and others' financial interests in the
organization.
✔✔Diagnosis-related group - ✔✔A grouping of similar healthcare cases that should
require similar resource consumption; Medicare uses diagnosis-related groups to
calculate prospective payments.
✔✔Continuous budgets - ✔✔Budgets that are updated continuously so that year end
never occurs.
,✔✔Balance sheet - ✔✔A statement that shows an organization's financial position at a
specific point in time.
✔✔Net patient services revenue - ✔✔Money generated by providing patient care minus
the amount an organization will not collect as a result of discounting charges per
contractual agreement and providing charity care.
✔✔Productivity measures - ✔✔A variety of ratios that measure employee productivity
during a shift, day, week, or month and by employee or employees.
✔✔Time value of money - ✔✔The concept that money available at the present time is
worth more than the same amount in the future because the value of money diminishes
over time as a result of inflation, risk, and uncertainty of returns from investments.
✔✔Gross revenue - ✔✔An entry to the patient ledger of the charge for a specific
healthcare service; no longer a meaningful measure.
✔✔Capital structure ratios - ✔✔Ratios that measure an organization's long-term liquidity
by measuring a variety of relationships to capital.
✔✔Current Procedural Terminology - ✔✔A set of medical codes used to report medical,
surgical, and diagnostic procedures and services.
✔✔Differential costing - ✔✔A method of assembling costs (and sometimes revenues) to
alternative decisions; also known as incremental costing or relevant costing.
✔✔Capital budgeting - ✔✔The process of converting the operating plan into budgets for
capital expenditures.
✔✔Noncurrent assets - ✔✔Economic resources that have a life of one year or more
(i.e., the organization expects to consume them over a span longer than one year).
✔✔Current assets - ✔✔Resources that an organization expects to consume within one
year.
✔✔Unrestricted net assets - ✔✔Net assets that have not been externally restricted by
donors or grantors, such as the excess of revenues to expenses from operations.
✔✔Four ways to finance capital expenditures - ✔✔Funded depreciation, philanthropy,
operating surpluses, and debt.
✔✔Break-even analysis - ✔✔An analysis to determine the volume point at which a
project will cover its costs; can be helpful to organizations considering new projects,
developing a business plan, or formulating a pricing strategy.
, ✔✔Pro forma - ✔✔A forecast of financial statements establishing the future financial
position of an organization for a given set of operating conditions or decisions.
✔✔Accrued expenses payable - ✔✔Liabilities for expenses that have been incurred by
the hospital but for which the hospital has not yet paid, such as compensation to
employees.
✔✔Fixed budgets - ✔✔Budgets that assume volumes, related revenues, and variable
expenses remain constant during the year.
✔✔Incremental budgeting - ✔✔Budgeting only for changes, such as new equipment;
the assumption in incremental budgeting is that the current budget is already optimal.
✔✔Net present value - ✔✔The present value of the future cash flow of an investment;
net present value takes into account the fact that future cash flows are 'discounted' to
determine their present value.
✔✔Sarbanes-Oxley Act - ✔✔Federal corporate accountability legislation passed in
2002 in the aftermath of the Enron bankruptcy and intended to improve governance and
corporate practices.
✔✔Working capital - ✔✔The amount of cash required to support operations for the
period of delay in collecting revenue.
✔✔Comprehensive budgeting - ✔✔Integration of all budgets into one document.
✔✔Accounts payable - ✔✔Amounts an organization owes to suppliers and other trade
creditors for merchandise and services purchased from them, but for which the
organization has not yet paid.
✔✔Transfer pricing - ✔✔The 'price' charged for intraorganization trade (i.e., the sale or
transfer of goods and services within an organization).
✔✔Profitability ratios - ✔✔Ratios that measure an organization's ability to exist and
grow.
✔✔Asset efficiency ratios - ✔✔Ratios that measure efficiency by comparing revenue to
assets.
✔✔Medicaid - ✔✔A program created by the federal government, funded by the federal
and state governments, and administered by the state government, to provide free or
low-cost healthcare to low-income recipients.
GRADED A+
✔✔Crisis communications plan - ✔✔A process for disseminating information to all
organizational stakeholders in the event of an emergency.
✔✔Strategic alliance - ✔✔A long-term, formal, and mutually beneficial relationship
between two or more parties to pursue a set of agreed-upon goals or to meet a critical
business need while remaining independent organizations.
✔✔Market structure - ✔✔The organizational characteristics of a market that exert a
strategic influence on the intensity and form of competition.
✔✔Core competencies - ✔✔The internal activities and functions central to fulfilling an
organization's mission; strategically valuable, they are the essence of what makes the
organization unique in providing value to its customers.
✔✔Bargaining unit - ✔✔A group of employees recognized by the National Labor
Relations Board as an appropriate body for collective bargaining under the National
Labor Relations Act.
✔✔Product (or service) life cycle - ✔✔Four distinct but not wholly predictable stages
every product or service goes through: (1) introduction to the market; (2) growth in
utilization and revenue; (3) maturity, when utilization and revenue stabilize; and (4)
decline, when utilization and revenue start to fall and eventually become too little for the
product or service to remain viable.
✔✔Strategic action cycle (four stages) - ✔✔(1) Strategic planning, (2) budgeting, (3)
implementing strategy, and (4) controlling problems and monitoring progress.
✔✔SWOT analysis - ✔✔A tool for understanding an organization's strategic situation;
examines both an organization's internal environment (its strengths and weaknesses)
and its external environment its opportunities and threats).
✔✔Net assets - ✔✔The difference between assets and liabilities in a not-for-profit
organization, which represents the owner's and others' financial interests in the
organization.
✔✔Diagnosis-related group - ✔✔A grouping of similar healthcare cases that should
require similar resource consumption; Medicare uses diagnosis-related groups to
calculate prospective payments.
✔✔Continuous budgets - ✔✔Budgets that are updated continuously so that year end
never occurs.
,✔✔Balance sheet - ✔✔A statement that shows an organization's financial position at a
specific point in time.
✔✔Net patient services revenue - ✔✔Money generated by providing patient care minus
the amount an organization will not collect as a result of discounting charges per
contractual agreement and providing charity care.
✔✔Productivity measures - ✔✔A variety of ratios that measure employee productivity
during a shift, day, week, or month and by employee or employees.
✔✔Time value of money - ✔✔The concept that money available at the present time is
worth more than the same amount in the future because the value of money diminishes
over time as a result of inflation, risk, and uncertainty of returns from investments.
✔✔Gross revenue - ✔✔An entry to the patient ledger of the charge for a specific
healthcare service; no longer a meaningful measure.
✔✔Capital structure ratios - ✔✔Ratios that measure an organization's long-term liquidity
by measuring a variety of relationships to capital.
✔✔Current Procedural Terminology - ✔✔A set of medical codes used to report medical,
surgical, and diagnostic procedures and services.
✔✔Differential costing - ✔✔A method of assembling costs (and sometimes revenues) to
alternative decisions; also known as incremental costing or relevant costing.
✔✔Capital budgeting - ✔✔The process of converting the operating plan into budgets for
capital expenditures.
✔✔Noncurrent assets - ✔✔Economic resources that have a life of one year or more
(i.e., the organization expects to consume them over a span longer than one year).
✔✔Current assets - ✔✔Resources that an organization expects to consume within one
year.
✔✔Unrestricted net assets - ✔✔Net assets that have not been externally restricted by
donors or grantors, such as the excess of revenues to expenses from operations.
✔✔Four ways to finance capital expenditures - ✔✔Funded depreciation, philanthropy,
operating surpluses, and debt.
✔✔Break-even analysis - ✔✔An analysis to determine the volume point at which a
project will cover its costs; can be helpful to organizations considering new projects,
developing a business plan, or formulating a pricing strategy.
, ✔✔Pro forma - ✔✔A forecast of financial statements establishing the future financial
position of an organization for a given set of operating conditions or decisions.
✔✔Accrued expenses payable - ✔✔Liabilities for expenses that have been incurred by
the hospital but for which the hospital has not yet paid, such as compensation to
employees.
✔✔Fixed budgets - ✔✔Budgets that assume volumes, related revenues, and variable
expenses remain constant during the year.
✔✔Incremental budgeting - ✔✔Budgeting only for changes, such as new equipment;
the assumption in incremental budgeting is that the current budget is already optimal.
✔✔Net present value - ✔✔The present value of the future cash flow of an investment;
net present value takes into account the fact that future cash flows are 'discounted' to
determine their present value.
✔✔Sarbanes-Oxley Act - ✔✔Federal corporate accountability legislation passed in
2002 in the aftermath of the Enron bankruptcy and intended to improve governance and
corporate practices.
✔✔Working capital - ✔✔The amount of cash required to support operations for the
period of delay in collecting revenue.
✔✔Comprehensive budgeting - ✔✔Integration of all budgets into one document.
✔✔Accounts payable - ✔✔Amounts an organization owes to suppliers and other trade
creditors for merchandise and services purchased from them, but for which the
organization has not yet paid.
✔✔Transfer pricing - ✔✔The 'price' charged for intraorganization trade (i.e., the sale or
transfer of goods and services within an organization).
✔✔Profitability ratios - ✔✔Ratios that measure an organization's ability to exist and
grow.
✔✔Asset efficiency ratios - ✔✔Ratios that measure efficiency by comparing revenue to
assets.
✔✔Medicaid - ✔✔A program created by the federal government, funded by the federal
and state governments, and administered by the state government, to provide free or
low-cost healthcare to low-income recipients.
