MHA 706 Financial Management
Midterm Practice Exam Questions And
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
1. The primary goal of financial management in healthcare organizations
is to:
A. Maximize patient satisfaction
B. Minimize costs
C. Maximize the value of the organization
D. Expand market share
Rationale: The primary financial goal is to maximize organizational value,
which ensures long-term sustainability and the ability to provide quality
care.
, 2. Which of the following is considered a current asset?
A. Land
B. Accounts receivable
C. Equipment
D. Buildings
Rationale: Current assets are expected to be converted into cash or used
within one year. Accounts receivable fit this definition.
3. The accounting equation is:
A. Assets = Liabilities - Equity
B. Assets + Liabilities = Equity
C. Assets = Liabilities + Equity
D. Assets - Liabilities = Revenue
Rationale: This is the fundamental accounting equation, showing the
relationship between what the organization owns and owes.
4. A hospital issued bonds to finance new equipment. This is an example
of:
A. Equity financing
B. Retained earnings financing
C. Debt financing
D. Operational financing
,Rationale: Debt financing involves borrowing money that must be repaid
with interest, such as bonds.
5. The statement of cash flows shows:
A. Revenues and expenses
B. Cash inflows and outflows
C. Assets and liabilities
D. Owner’s equity
Rationale: The statement of cash flows details how cash moves in and out of
the organization, highlighting liquidity.
6. Break-even analysis is primarily used to determine:
A. Profit margins
B. The volume of services needed to cover costs
C. Asset utilization
D. Investment returns
Rationale: Break-even analysis identifies the point at which total revenues
equal total costs.
7. The time value of money refers to:
A. Money loses value over time due to inflation
B. Money grows linearly over time
, C. A dollar today is worth more than a dollar in the future
D. The depreciation of assets
Rationale: This principle reflects opportunity cost and the potential earning
capacity of money over time.
8. Which of the following is an example of a fixed cost in a healthcare
organization?
A. Medical supplies
B. Salaries of administrative staff
C. Laboratory reagents
D. Utility bills per patient
Rationale: Fixed costs remain constant regardless of patient volume, such as
administrative salaries.
9. Return on assets (ROA) measures:
A. Profitability relative to equity
B. Profitability relative to total assets
C. Liquidity
D. Debt ratio
Rationale: ROA shows how efficiently assets are used to generate profits.
Midterm Practice Exam Questions And
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
1. The primary goal of financial management in healthcare organizations
is to:
A. Maximize patient satisfaction
B. Minimize costs
C. Maximize the value of the organization
D. Expand market share
Rationale: The primary financial goal is to maximize organizational value,
which ensures long-term sustainability and the ability to provide quality
care.
, 2. Which of the following is considered a current asset?
A. Land
B. Accounts receivable
C. Equipment
D. Buildings
Rationale: Current assets are expected to be converted into cash or used
within one year. Accounts receivable fit this definition.
3. The accounting equation is:
A. Assets = Liabilities - Equity
B. Assets + Liabilities = Equity
C. Assets = Liabilities + Equity
D. Assets - Liabilities = Revenue
Rationale: This is the fundamental accounting equation, showing the
relationship between what the organization owns and owes.
4. A hospital issued bonds to finance new equipment. This is an example
of:
A. Equity financing
B. Retained earnings financing
C. Debt financing
D. Operational financing
,Rationale: Debt financing involves borrowing money that must be repaid
with interest, such as bonds.
5. The statement of cash flows shows:
A. Revenues and expenses
B. Cash inflows and outflows
C. Assets and liabilities
D. Owner’s equity
Rationale: The statement of cash flows details how cash moves in and out of
the organization, highlighting liquidity.
6. Break-even analysis is primarily used to determine:
A. Profit margins
B. The volume of services needed to cover costs
C. Asset utilization
D. Investment returns
Rationale: Break-even analysis identifies the point at which total revenues
equal total costs.
7. The time value of money refers to:
A. Money loses value over time due to inflation
B. Money grows linearly over time
, C. A dollar today is worth more than a dollar in the future
D. The depreciation of assets
Rationale: This principle reflects opportunity cost and the potential earning
capacity of money over time.
8. Which of the following is an example of a fixed cost in a healthcare
organization?
A. Medical supplies
B. Salaries of administrative staff
C. Laboratory reagents
D. Utility bills per patient
Rationale: Fixed costs remain constant regardless of patient volume, such as
administrative salaries.
9. Return on assets (ROA) measures:
A. Profitability relative to equity
B. Profitability relative to total assets
C. Liquidity
D. Debt ratio
Rationale: ROA shows how efficiently assets are used to generate profits.
