Nonprofit and government accounting Exam 3 |\ |\ |\ |\ |\
questions with answers
|\ |\ |\
Typical objectives of a performance audit include
|\ |\ |\ |\ |\ |\ |\
a. Determining whether financial statements fairly present the
|\ |\ |\ |\ |\ |\ |\ |\
entity's operational results. |\ |\ |\
b. Judging the appropriateness of an entity's program goals.
|\ |\ |\ |\ |\ |\ |\ |\ |\
c. Determining whether financial statements fairly present in
|\ |\ |\ |\ |\ |\ |\ |\
conformity with GAAP. |\ |\ |\
d. Assessing effectiveness and results, economy and efficiency,
|\ |\ |\ |\ |\ |\ |\ |\
and internal controls and compliance with laws and regulations. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔*d. Assessing effectiveness and results,
|\ |\ |\ |\ |\ |\ |\
economy and efficiency, and internal controls and compliance
|\ |\ |\ |\ |\ |\ |\ |\
with laws and regulations.
|\ |\ |\
Which of the following systems of cost allocation is most common
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
in governmental accounting?
|\ |\ |\ |\
a. Federal cost methods
|\ |\ |\ |\
b. Direct costing
|\ |\ |\
c. Process costing
|\ |\ |\
d. Step-down method - CORRECT ANSWERS ✔✔*d. Step-down
|\ |\ |\ |\ |\ |\ |\ |\
method
Which of the following describes the usual flow of budgetary
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
authority through the budgetary accounts of a federal agency?
|\ |\ |\ |\ |\ |\ |\ |\ |\
,a. Apportionment, allotment, appropriation, commitment,
|\ |\ |\ |\ |\
obligation, expended appropriation. |\ |\ |\
b. Allotment, commitment, obligation, expended appropriation,
|\ |\ |\ |\ |\ |\
apportionment. |\
Which of the following describes the usual flow of budgetary
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
authority through the budgetary accounts of a federal agency?
|\ |\ |\ |\ |\ |\ |\ |\ |\
c. Appropriation, apportionment, allotment, commitment,
|\ |\ |\ |\ |\
obligation, expended appropriation. |\ |\ |\
d. Commitment, obligation, appropriation, apportionment,
|\ |\ |\ |\ |\
allotment, expended appropriation. - CORRECT ANSWERS ✔✔*c.
|\ |\ |\ |\ |\ |\ |\
Appropriation, apportionment, allotment, commitment, obligation, |\ |\ |\ |\
expended appropriation.
|\ |\
Charity service and bad debts in a hospital that follows business-
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
type accounting are reported
|\ |\ |\ |\
a. The same, both as deductions from gross patient revenue in
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
arriving at net patient revenue. |\ |\ |\ |\ |\
b. The same, both are reported as expenses.
|\ |\ |\ |\ |\ |\ |\ |\
c. Differently, charity service is reported as a deduction from
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
gross patient revenue and bad debts are reported as an expense.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
|\
d. Differently, charity service is disclosed in the notes to the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
financial statements, and bad debts are reported as a deduction
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
from revenue. - CORRECT ANSWERS ✔✔*d. Differently, charity
|\ |\ |\ |\ |\ |\ |\ |\
service is disclosed in the notes to the financial statements, and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
bad debts are reported as a deduction from revenue.
|\ |\ |\ |\ |\ |\ |\ |\
,Which of the following budgetary approaches starts with line-item
|\ |\ |\ |\ |\ |\ |\ |\
expenditures and applies a factor approximating the inflation
|\ |\ |\ |\ |\ |\ |\ |\ |\
rate to most items, unless specific information is available to
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
suggest a different factor be applied?
|\ |\ |\ |\ |\ |\
a. Performance budgeting.
|\ |\ |\
b. Zero-based budgeting.
|\ |\ |\
c. Program budgeting.
|\ |\ |\
d. Incremental budgeting. - CORRECT ANSWERS ✔✔*d.
|\ |\ |\ |\ |\ |\ |\
Incremental budgeting. |\
The account "contractual discounts" in healthcare:
|\ |\ |\ |\ |\ |\
a. normally had credit balance
|\ |\ |\ |\ |\
b. normally has a debit balance
|\ |\ |\ |\ |\ |\
c. is shown on the balance sheet
|\ |\ |\ |\ |\ |\ |\
d. is shown on the statement of changes in net assets (income
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
statement) |\
e. both A and D are correct - CORRECT ANSWERS ✔✔*b. normally
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
has a debit balance
|\ |\ |\ |\
Statement of Financial Accounting Standards (SFAS) No. 117
|\ |\ |\ |\ |\ |\ |\ |\
requires the following financial reporting perspective for not-for-
|\ |\ |\ |\ |\ |\ |\
profit organizations|\ |\
a. Dual tracking
|\ |\ |\
b. Fund
|\ |\
, c. Aggregate
|\ |\
d. both a. and c.
|\ |\ |\ |\ |\
e. three of the answers are correct - CORRECT ANSWERS ✔✔*c.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Aggregate
Which of the following statements is true about diagnosis-related
|\ |\ |\ |\ |\ |\ |\ |\ |\
groups (DRGs)? |\ |\
a. DRGs are the basis for a cost accounting method that groups
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
costs together by departments performing the services.
|\ |\ |\ |\ |\ |\ |\
b. A DRG is a case-mix classification scheme that is used to
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
determine the payment provided to the hospital for inpatient |\ |\ |\ |\ |\ |\ |\ |\ |\
services, regardless of how much the hospital spends to treat a
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
patient. |\
c. The federal Medicare system of retroactive payment for
|\ |\ |\ |\ |\ |\ |\ |\ |\
services depends on DRGs. |\ |\ |\ |\
d. The diagnostic-related groups method is the prevailing practice
|\ |\ |\ |\ |\ |\ |\ |\
of billing third-party payors for a health care organization's
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
average cost for providing care for locally defined similar medical
|\ |\ |\ |\ |\ |\ |\ |\ |\
conditions. - CORRECT ANSWERS ✔✔*b. A DRG is a case-mix
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
classification scheme that is used to determine the payment |\ |\ |\ |\ |\ |\ |\ |\ |\
provided to the hospital for inpatient services, regardless of how
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
much the hospital spends to treat a patient.
|\ |\ |\ |\ |\ |\ |\
For a not-for-profit organization the expenses are reported in:
|\ |\ |\ |\ |\ |\ |\ |\ |\
a. the traditional income statement
|\ |\ |\ |\ |\
b. each of the sections of the statement of changes in net assets
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
questions with answers
|\ |\ |\
Typical objectives of a performance audit include
|\ |\ |\ |\ |\ |\ |\
a. Determining whether financial statements fairly present the
|\ |\ |\ |\ |\ |\ |\ |\
entity's operational results. |\ |\ |\
b. Judging the appropriateness of an entity's program goals.
|\ |\ |\ |\ |\ |\ |\ |\ |\
c. Determining whether financial statements fairly present in
|\ |\ |\ |\ |\ |\ |\ |\
conformity with GAAP. |\ |\ |\
d. Assessing effectiveness and results, economy and efficiency,
|\ |\ |\ |\ |\ |\ |\ |\
and internal controls and compliance with laws and regulations. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔*d. Assessing effectiveness and results,
|\ |\ |\ |\ |\ |\ |\
economy and efficiency, and internal controls and compliance
|\ |\ |\ |\ |\ |\ |\ |\
with laws and regulations.
|\ |\ |\
Which of the following systems of cost allocation is most common
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
in governmental accounting?
|\ |\ |\ |\
a. Federal cost methods
|\ |\ |\ |\
b. Direct costing
|\ |\ |\
c. Process costing
|\ |\ |\
d. Step-down method - CORRECT ANSWERS ✔✔*d. Step-down
|\ |\ |\ |\ |\ |\ |\ |\
method
Which of the following describes the usual flow of budgetary
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
authority through the budgetary accounts of a federal agency?
|\ |\ |\ |\ |\ |\ |\ |\ |\
,a. Apportionment, allotment, appropriation, commitment,
|\ |\ |\ |\ |\
obligation, expended appropriation. |\ |\ |\
b. Allotment, commitment, obligation, expended appropriation,
|\ |\ |\ |\ |\ |\
apportionment. |\
Which of the following describes the usual flow of budgetary
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
authority through the budgetary accounts of a federal agency?
|\ |\ |\ |\ |\ |\ |\ |\ |\
c. Appropriation, apportionment, allotment, commitment,
|\ |\ |\ |\ |\
obligation, expended appropriation. |\ |\ |\
d. Commitment, obligation, appropriation, apportionment,
|\ |\ |\ |\ |\
allotment, expended appropriation. - CORRECT ANSWERS ✔✔*c.
|\ |\ |\ |\ |\ |\ |\
Appropriation, apportionment, allotment, commitment, obligation, |\ |\ |\ |\
expended appropriation.
|\ |\
Charity service and bad debts in a hospital that follows business-
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
type accounting are reported
|\ |\ |\ |\
a. The same, both as deductions from gross patient revenue in
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
arriving at net patient revenue. |\ |\ |\ |\ |\
b. The same, both are reported as expenses.
|\ |\ |\ |\ |\ |\ |\ |\
c. Differently, charity service is reported as a deduction from
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
gross patient revenue and bad debts are reported as an expense.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
|\
d. Differently, charity service is disclosed in the notes to the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
financial statements, and bad debts are reported as a deduction
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
from revenue. - CORRECT ANSWERS ✔✔*d. Differently, charity
|\ |\ |\ |\ |\ |\ |\ |\
service is disclosed in the notes to the financial statements, and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
bad debts are reported as a deduction from revenue.
|\ |\ |\ |\ |\ |\ |\ |\
,Which of the following budgetary approaches starts with line-item
|\ |\ |\ |\ |\ |\ |\ |\
expenditures and applies a factor approximating the inflation
|\ |\ |\ |\ |\ |\ |\ |\ |\
rate to most items, unless specific information is available to
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
suggest a different factor be applied?
|\ |\ |\ |\ |\ |\
a. Performance budgeting.
|\ |\ |\
b. Zero-based budgeting.
|\ |\ |\
c. Program budgeting.
|\ |\ |\
d. Incremental budgeting. - CORRECT ANSWERS ✔✔*d.
|\ |\ |\ |\ |\ |\ |\
Incremental budgeting. |\
The account "contractual discounts" in healthcare:
|\ |\ |\ |\ |\ |\
a. normally had credit balance
|\ |\ |\ |\ |\
b. normally has a debit balance
|\ |\ |\ |\ |\ |\
c. is shown on the balance sheet
|\ |\ |\ |\ |\ |\ |\
d. is shown on the statement of changes in net assets (income
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
statement) |\
e. both A and D are correct - CORRECT ANSWERS ✔✔*b. normally
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
has a debit balance
|\ |\ |\ |\
Statement of Financial Accounting Standards (SFAS) No. 117
|\ |\ |\ |\ |\ |\ |\ |\
requires the following financial reporting perspective for not-for-
|\ |\ |\ |\ |\ |\ |\
profit organizations|\ |\
a. Dual tracking
|\ |\ |\
b. Fund
|\ |\
, c. Aggregate
|\ |\
d. both a. and c.
|\ |\ |\ |\ |\
e. three of the answers are correct - CORRECT ANSWERS ✔✔*c.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Aggregate
Which of the following statements is true about diagnosis-related
|\ |\ |\ |\ |\ |\ |\ |\ |\
groups (DRGs)? |\ |\
a. DRGs are the basis for a cost accounting method that groups
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
costs together by departments performing the services.
|\ |\ |\ |\ |\ |\ |\
b. A DRG is a case-mix classification scheme that is used to
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
determine the payment provided to the hospital for inpatient |\ |\ |\ |\ |\ |\ |\ |\ |\
services, regardless of how much the hospital spends to treat a
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
patient. |\
c. The federal Medicare system of retroactive payment for
|\ |\ |\ |\ |\ |\ |\ |\ |\
services depends on DRGs. |\ |\ |\ |\
d. The diagnostic-related groups method is the prevailing practice
|\ |\ |\ |\ |\ |\ |\ |\
of billing third-party payors for a health care organization's
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
average cost for providing care for locally defined similar medical
|\ |\ |\ |\ |\ |\ |\ |\ |\
conditions. - CORRECT ANSWERS ✔✔*b. A DRG is a case-mix
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
classification scheme that is used to determine the payment |\ |\ |\ |\ |\ |\ |\ |\ |\
provided to the hospital for inpatient services, regardless of how
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
much the hospital spends to treat a patient.
|\ |\ |\ |\ |\ |\ |\
For a not-for-profit organization the expenses are reported in:
|\ |\ |\ |\ |\ |\ |\ |\ |\
a. the traditional income statement
|\ |\ |\ |\ |\
b. each of the sections of the statement of changes in net assets
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
