Healthcare Finance final exam chapter 8
cost accounting
Define cost accounting - correct answer ✔✔The analysis of costs, including methods for classifying costs,
allocating costs, assembling costs, and determining product costs
Cost accounting Purpose - correct answer ✔✔The purpose of cost accounting is to provide management
with cost information for a variety of reasons, including cost management, setting charges, and
profitability analysis
Methods of classifying costs: Financial Accounting Cost - correct answer ✔✔a measurement in monetary
terms of the amount of resources used for a certain purpose. Technically, cost is a value placed on goods
or services. When the value expires, the cost becomes an expense. Historical costs derived directly from
the financial statements are an example of accounting costs.
Method of classifying cost: Managerial Accounting - correct answer ✔✔present and future costs that
help management make better decisions. Costs derived from budget reports are an example of
managerial costs.
Management Function: Operating Costs - correct answer ✔✔associated with producing the product or
providing the service. For example, supply costs associated with a patient visit to the emergency room
would be considered operating costs.
Management Function: Nonperating Costs - correct answer ✔✔associated with supporting the
production of a product or the provision of a service. For example, costs associated with borrowing
money for the equipment in the emergency room would be considered nonoperating costs.
Traceability: Direct - correct answer ✔✔are costs that can be traced directly to a department, product,
or service, such as labor and supplies.
Traceability: Indirect - correct answer ✔✔also known as overhead costs) cannot be traced directly to a
department, product, or service. An example is costs associated with heating and cooling.
cost accounting
Define cost accounting - correct answer ✔✔The analysis of costs, including methods for classifying costs,
allocating costs, assembling costs, and determining product costs
Cost accounting Purpose - correct answer ✔✔The purpose of cost accounting is to provide management
with cost information for a variety of reasons, including cost management, setting charges, and
profitability analysis
Methods of classifying costs: Financial Accounting Cost - correct answer ✔✔a measurement in monetary
terms of the amount of resources used for a certain purpose. Technically, cost is a value placed on goods
or services. When the value expires, the cost becomes an expense. Historical costs derived directly from
the financial statements are an example of accounting costs.
Method of classifying cost: Managerial Accounting - correct answer ✔✔present and future costs that
help management make better decisions. Costs derived from budget reports are an example of
managerial costs.
Management Function: Operating Costs - correct answer ✔✔associated with producing the product or
providing the service. For example, supply costs associated with a patient visit to the emergency room
would be considered operating costs.
Management Function: Nonperating Costs - correct answer ✔✔associated with supporting the
production of a product or the provision of a service. For example, costs associated with borrowing
money for the equipment in the emergency room would be considered nonoperating costs.
Traceability: Direct - correct answer ✔✔are costs that can be traced directly to a department, product,
or service, such as labor and supplies.
Traceability: Indirect - correct answer ✔✔also known as overhead costs) cannot be traced directly to a
department, product, or service. An example is costs associated with heating and cooling.
