MHA 702 Exam 3 comprehensive questions and verified accurate solution (detailed & elaborated) Latest Update TEST!!

1. What is the primary goal of financial management in a not-for-profit healthcare organization? A. Maximize shareholder wealth B. Maximize reimbursements from insurers C. Ensure financial viability to fulfill the social mission D. Minimize the number of employees ANSWER: C. Ensure financial viability to fulfill the social mission 2. Which of the following is considered a current asset? A. Land B. Building C. Medical equipment D. Accounts receivable ANSWER: D. Accounts receivable 3. The statement that reports revenues and expenses over a specific period of time is the: A. Balance Sheet B. Income Statement C. Statement of Cash Flows D. Statement of Equity ANSWER: B. Income Statement 4. Depreciation expense is an example of a: A. Variable cost B. Fixed cost C. Direct cost D. Marginal cost ANSWER: B. Fixed cost 5. What does the current ratio measure? A. Profitability B. Liquidity C. Leverage D. Activity ANSWER: B. Liquidity 6. A high number of days in accounts receivable typically indicates: A. Excellent collection processes B. Poor collection processes C. High patient satisfaction D. Low operating expenses ANSWER: B. Poor collection processes 7. Which type of budget is built from the ground up each year, requiring justification for all expenses? A. Static Budget B. Flexible Budget C. Zero-Based Budget D. Rolling Budget ANSWER: C. Zero-Based Budget 8. The cost of forgoing the next best alternative when making a decision is known as: A. Sunk Cost B. Opportunity Cost C. Fixed Cost D. Variable Cost ANSWER: B. Opportunity Cost 9. Which payer typically reimburses healthcare providers the least for the same service? A. Commercial Insurance B. Medicare C. Medicaid D. Self-Pay ANSWER: C. Medicaid 10. What is the formula for the profit margin? A. (Net Income / Total Revenue) x 100 B. (Current Assets / Current Liabilities) C. (Total Debt / Total Assets) D. (Net Income / Total Assets) x 100 ANSWER: A. (Net Income / Total Revenue) x 100 11. Capital budgeting is primarily concerned with: A. Short-term operational expenses B. Long-term investments in assets C. Managing daily cash flow D. Preparing the income statement ANSWER: B. Long-term investments in assets 12. Which of the following is a source of cash? A. An increase in inventory B. A decrease in accounts payable C. Issuing new stock D. Purchasing new equipment ANSWER: C. Issuing new stock 13. The mixture of debt and equity used to finance a organization is called its: A. Capital structure B. Working capital C. Asset allocation D. Cost of capital ANSWER: A. Capital structure 14. What type of risk is specific to a company or industry? A. Systematic Risk B. Market Risk C. Unsystematic Risk D. Interest Rate Risk ANSWER: C. Unsystematic Risk 15. The time value of money concept states that: A. Money today is worth more than the same amount in the future B. Money in the future is worth more than money today C. The value of money is constant over time D. Inflation has no effect on purchasing power ANSWER: A. Money today is worth more than the same amount in the future 16. What is the purpose of a capital gains tax? A. Tax on earned wages B. Tax on the profit from the sale of an asset C. Tax on corporate revenue D. Tax on retail sales ANSWER: B. Tax on the profit from the sale of an asset 17. In the context of insurance, the "deductible" is the: A. Amount the insurance pays after the copay B. Fixed amount the patient pays for a service C. Amount the patient must pay out-of-pocket before the insurance begins to pay D. Maximum amount the insurance will pay in a year ANSWER: C. Amount the patient must pay out-of-pocket before the insurance begins to pay 18. Which financial statement would you use to determine a company's debt level? A. Income Statement B. Balance Sheet C. Statement of Cash Flows D. Statement of Retained Earnings ANSWER: B. Balance Sheet 19. A bond's "coupon rate" refers to its: A. Current market price B. Face value C. Stated annual interest rate D. Maturity date ANSWER: C. Stated annual interest rate 20. Which of the following is an example of an internal user of financial statements? A. Banker B. Hospital CEO C. Investor D. Supplier ANSWER: B. Hospital CEO 21. The "matching principle" in accounting dictates that: A. Expenses should be recorded in the same period as the revenues they help to generate B. Assets must always equal liabilities plus equity C. All transactions must be recorded in US dollars D. Revenues are recorded when cash is received ANSWER: A. Expenses should be recorded in the same period as the revenues they help to generate 22. What is the primary purpose of the Statement of Cash Flows? A. To show profitability B. To show the sources and uses of cash during a period C. To list all assets and liabilities D. To calculate net income ANSWER: B. To show the sources and uses of cash during a period