Healthcare Finance Fundamentals — Practice Examination
Accredited Test Bank Solution For Gapenski's Fundamentals of Healthcare Finance, 3rd Edition Reiter [All
Lessons Included]
Healthcare Finance Fundamentals
Page 1 of 33
, Healthcare Finance Fundamentals — Practice Examination
1. Which financial statement reports a healthcare organization's assets, liabilities, and net
assets at a single point in time?
A. Balance sheet ✓
B. Statement of cash flows
C. Statement of changes in net assets
D. Statement of operations
2. On a not-for-profit hospital's balance sheet, the equity section is labeled as:
A. Net assets ✓
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, Healthcare Finance Fundamentals — Practice Examination
B. Owner's capital
C. Stockholders' equity
D. Retained earnings
3. The statement of operations for a healthcare business is most similar to which for-profit
statement?
A. Balance sheet
B. Statement of cash flows
C. Income statement ✓
D. Statement of retained earnings
4. Total margin is calculated as:
A. Net income divided by total revenue ✓
B. Total revenue divided by total assets
C. Net income divided by equity
D. Net income divided by total assets
5. Which of the following is classified as a current asset on a hospital balance sheet?
A. Net patient accounts receivable ✓
B. Long-term investments
C. Land held for future use
D. Property, plant, and equipment
6. Depreciation expense on the statement of operations represents:
A. A liability owed to creditors
B. A cash outflow in the current period
C. The allocation of the cost of a fixed asset over its useful life ✓
D. The market value decline of an asset
7. The statement of cash flows classifies cash flows into which three categories?
A. Operating, investing, and financing ✓
B. Revenue, expense, and net income
C. Assets, liabilities, and equity
D. Current, fixed, and long-term
8. Restricted net assets on a not-for-profit balance sheet indicate:
A. Resources whose use is limited by donor stipulations ✓
B. Assets pledged as collateral for all debt
C. Funds set aside solely for depreciation
D. Cash that cannot be spent under any circumstances
Page 3 of 33
, Healthcare Finance Fundamentals — Practice Examination
9. Which statement explains why net assets changed from the beginning to the end of the
reporting period?
A. Balance sheet
B. Statement of cash flows
C. Statement of changes in net assets ✓
D. Notes to financial statements
10. Operating income differs from net income primarily because operating income
excludes:
A. Salaries and wages expense
B. Supplies expense
C. Non-operating gains and losses such as investment income ✓
D. Depreciation expense
11. A hospital's accounts receivable represents:
A. The hospital's investment portfolio
B. Cash on hand at the hospital
C. Amounts the hospital owes to suppliers
D. Amounts owed to the hospital by patients and third-party payers ✓
12. Contractual allowances on the statement of operations represent:
A. Charity care provided free of charge
B. The difference between gross charges and the amount payers have agreed to pay ✓
C. Discounts given to self-pay patients only
D. Bad debt write-offs
13. Which of the following would appear under financing activities on the statement of cash
flows?
A. Purchase of new medical equipment
B. Proceeds from issuance of long-term debt ✓
C. Cash received from patient services
D. Payment of salaries
14. The going concern assumption in accounting means:
A. Financial statements are prepared only at dissolution
B. The organization is assumed to continue operating in the foreseeable future ✓
C. Revenue is recognized only when cash is received
D. The organization must liquidate all assets annually
15. Under accrual accounting, revenue is recognized when:
A. It is earned, regardless of when cash is received ✓
B. Cash is received from the patient or payer
Page 4 of 33
Accredited Test Bank Solution For Gapenski's Fundamentals of Healthcare Finance, 3rd Edition Reiter [All
Lessons Included]
Healthcare Finance Fundamentals
Page 1 of 33
, Healthcare Finance Fundamentals — Practice Examination
1. Which financial statement reports a healthcare organization's assets, liabilities, and net
assets at a single point in time?
A. Balance sheet ✓
B. Statement of cash flows
C. Statement of changes in net assets
D. Statement of operations
2. On a not-for-profit hospital's balance sheet, the equity section is labeled as:
A. Net assets ✓
Page 2 of 33
, Healthcare Finance Fundamentals — Practice Examination
B. Owner's capital
C. Stockholders' equity
D. Retained earnings
3. The statement of operations for a healthcare business is most similar to which for-profit
statement?
A. Balance sheet
B. Statement of cash flows
C. Income statement ✓
D. Statement of retained earnings
4. Total margin is calculated as:
A. Net income divided by total revenue ✓
B. Total revenue divided by total assets
C. Net income divided by equity
D. Net income divided by total assets
5. Which of the following is classified as a current asset on a hospital balance sheet?
A. Net patient accounts receivable ✓
B. Long-term investments
C. Land held for future use
D. Property, plant, and equipment
6. Depreciation expense on the statement of operations represents:
A. A liability owed to creditors
B. A cash outflow in the current period
C. The allocation of the cost of a fixed asset over its useful life ✓
D. The market value decline of an asset
7. The statement of cash flows classifies cash flows into which three categories?
A. Operating, investing, and financing ✓
B. Revenue, expense, and net income
C. Assets, liabilities, and equity
D. Current, fixed, and long-term
8. Restricted net assets on a not-for-profit balance sheet indicate:
A. Resources whose use is limited by donor stipulations ✓
B. Assets pledged as collateral for all debt
C. Funds set aside solely for depreciation
D. Cash that cannot be spent under any circumstances
Page 3 of 33
, Healthcare Finance Fundamentals — Practice Examination
9. Which statement explains why net assets changed from the beginning to the end of the
reporting period?
A. Balance sheet
B. Statement of cash flows
C. Statement of changes in net assets ✓
D. Notes to financial statements
10. Operating income differs from net income primarily because operating income
excludes:
A. Salaries and wages expense
B. Supplies expense
C. Non-operating gains and losses such as investment income ✓
D. Depreciation expense
11. A hospital's accounts receivable represents:
A. The hospital's investment portfolio
B. Cash on hand at the hospital
C. Amounts the hospital owes to suppliers
D. Amounts owed to the hospital by patients and third-party payers ✓
12. Contractual allowances on the statement of operations represent:
A. Charity care provided free of charge
B. The difference between gross charges and the amount payers have agreed to pay ✓
C. Discounts given to self-pay patients only
D. Bad debt write-offs
13. Which of the following would appear under financing activities on the statement of cash
flows?
A. Purchase of new medical equipment
B. Proceeds from issuance of long-term debt ✓
C. Cash received from patient services
D. Payment of salaries
14. The going concern assumption in accounting means:
A. Financial statements are prepared only at dissolution
B. The organization is assumed to continue operating in the foreseeable future ✓
C. Revenue is recognized only when cash is received
D. The organization must liquidate all assets annually
15. Under accrual accounting, revenue is recognized when:
A. It is earned, regardless of when cash is received ✓
B. Cash is received from the patient or payer
Page 4 of 33
