BHA4008
Health Care Budgeting & Reporting
MIDTERM READINESS EXAM
GUIDE
Q&S
©2024/2025
,1. Which of the following is NOT a characteristic of zero-based
budgeting (ZBB)?
- A) Budgeting starts from a "zero base"
- B) All expenses must be justified for each new period
- C) The previous year's budget is used as a baseline
- D) Encourages managers to think about needs vs. wants
- Correct Answer: C
- Rationale: ZBB requires justifying all expenses for each new
period without reference to previous budgets.
2. In health care organizations, what does the term "capitation"
refer to?
- A) A method of budgeting hospital equipment
- B) A fixed payment model per patient for a defined period
- C) The total cost of annual care per department
- D) The methodology used to price surgeries
- Correct Answer: B
- Rationale: Capitation is a payment arrangement for health
care service providers where they receive a set amount of money
per patient regardless of how many services each patient uses.
3. What type of budgeting method involves comparing current
budget needs against historical data?
- A) Incremental budgeting
- B) Variable budgeting
- C) Rolling budgeting
- D) Performance-based budgeting
- Correct Answer: A
- Rationale: Incremental budgeting takes the previous
©2024/2025
, period's budget as a base and adjusts it for the next period.
### Fill-in-the-Blank Questions
4. In health care budgeting, _________ is the process of
systematically evaluating the financial performance of clinical
services.
- Correct Answer: variance analysis
- Rationale: Variance analysis helps managers assess
differences between expected and actual financial performance.
5. A _________ budget compares the budgeted revenues and
expenses to the actual revenue and expenses incurred over a
period.
- Correct Answer: performance
- Rationale: A performance budget provides comparative
data to assess financial health and operational efficiency.
6. _________ auditing refers to the analysis of financial
documents to ensure accuracy, compliance, and effectiveness of
financial management.
- Correct Answer: Financial
- Rationale: Financial auditing is essential in ensuring that the
financial practices align with standards and regulations.
### True/False Questions
7. True or False: Activity-based budgeting allocates funds based
on the evaluation of activities that drive costs.
- Correct Answer: True
- Rationale: Activity-based budgeting focuses on identifying
©2024/2025
Health Care Budgeting & Reporting
MIDTERM READINESS EXAM
GUIDE
Q&S
©2024/2025
,1. Which of the following is NOT a characteristic of zero-based
budgeting (ZBB)?
- A) Budgeting starts from a "zero base"
- B) All expenses must be justified for each new period
- C) The previous year's budget is used as a baseline
- D) Encourages managers to think about needs vs. wants
- Correct Answer: C
- Rationale: ZBB requires justifying all expenses for each new
period without reference to previous budgets.
2. In health care organizations, what does the term "capitation"
refer to?
- A) A method of budgeting hospital equipment
- B) A fixed payment model per patient for a defined period
- C) The total cost of annual care per department
- D) The methodology used to price surgeries
- Correct Answer: B
- Rationale: Capitation is a payment arrangement for health
care service providers where they receive a set amount of money
per patient regardless of how many services each patient uses.
3. What type of budgeting method involves comparing current
budget needs against historical data?
- A) Incremental budgeting
- B) Variable budgeting
- C) Rolling budgeting
- D) Performance-based budgeting
- Correct Answer: A
- Rationale: Incremental budgeting takes the previous
©2024/2025
, period's budget as a base and adjusts it for the next period.
### Fill-in-the-Blank Questions
4. In health care budgeting, _________ is the process of
systematically evaluating the financial performance of clinical
services.
- Correct Answer: variance analysis
- Rationale: Variance analysis helps managers assess
differences between expected and actual financial performance.
5. A _________ budget compares the budgeted revenues and
expenses to the actual revenue and expenses incurred over a
period.
- Correct Answer: performance
- Rationale: A performance budget provides comparative
data to assess financial health and operational efficiency.
6. _________ auditing refers to the analysis of financial
documents to ensure accuracy, compliance, and effectiveness of
financial management.
- Correct Answer: Financial
- Rationale: Financial auditing is essential in ensuring that the
financial practices align with standards and regulations.
### True/False Questions
7. True or False: Activity-based budgeting allocates funds based
on the evaluation of activities that drive costs.
- Correct Answer: True
- Rationale: Activity-based budgeting focuses on identifying
©2024/2025
