©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
NFP Final Exam Review Chapter 14
Questions And Answers |Latest 2025 |
Guaranteed Pass.
In what significant ways would each of the 3 major statements of a gov't hospital differ from
those of a private NFP hospital? - Answer✔Private NFP hospitals have to follow the provisions
of FASB ASU No. 2016-14 as to the form and content of their financial statements. the balance
sheet of a NFP hospital , but not a gov't hospital, must display the two categories of donor
restrictiveness. Gov't healthcare entities do not have a statement comparable to the statement
of changes in net assets.
What are the major categories of revenues and expenses for a health-care org? - Answer✔The
major categories of revenues for a health care org are divided into at least 2 classifications,
patient care revenues and other revenues. Patient care revenues include routine services, other
nursing services, and professional services. Other revenues include auxiliary sales, fees for
educational programs, rental of facilities other than to residents, investment gains and losses
and miscellaneous sources. The major expenses of a healthcare org must be presented at a
minimum in two major categories, program service expenses and support services such as
general/admin expenses.
What are the differences between recording a hospital's expenses by natural classifications
than by function? - Answer✔Expenses may be classified using either a natural classification
(salaries, supplies, etc.) or a functional classification (impatient services, ancillary outpatient
services, etc.) If the expenses are classified using a natural classification then the functional
classifications must be presented in the notes to the financial statements.
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, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
Why is the statement of functional expenses requied for voluntary health and welfare
organizations? - Answer✔The statement of functional expenses is required for NFP orgs,
because for most of these entities major source source of revenues is from donations rather
than from the sale of goods or services.
What are capitation fees and how should they be accounted for? - Answer✔Capitation fees are
those received in exchange for a health care orgs agreement either with an individual or with a
company to provide specified services to a specified population during a specified period of
time. The fees are based on the number of persons covered and on expected costs to be
incurred rather than on actual services provided. Revenues from capitation fees should
generally be shown apart from other types of revenues and should be accounted for over the
period covered, not as services provided.
Hospitals and other health-care organizations provide services knowing that hey will collect
from third-party payers, such as insurance companies, considerably less than their established
billing rates. In addition, they provide services to uninsured patients and are aware that they
will collect either none or only a small portion of the amounts to be billed. Comment on how
these orgs distinguish between charity care, bad debts, and contractual adjustments, and
indicate how each affects the amount of revenue from patient care that they should report. -
Answer✔Charity care results from a healthcare entity's policy to provide health services free of
charge to individuals who meet certain financial criteria. Since charity care is not expected to
result in cash inflows, it is not recognized either as revenue, or as receivables. Health care
entities should disclose in notes to the financial statements their policies as to the charitable
care and the value of the charity care provided which is measured based on the costs of
providing the care. Bad debt expenses represents what the entity expects to be able to collect
from parties to whom it has extended credit. Contractual adjustments are the difference
between established rates and third-party-payer payments and discounts is the difference
between established rates and the amount collectible that the entity knowingly and willingly
provides to third-party payers.
A NFP hospital pays $150,000 interest on its bonds outstanding. The bonds were issued to
finance construction of a new hospital wing. In its statement of cash flow, the interest should
be shown as a cash outflow from - Answer✔operating activities
A gov't hospital pays $150,000 in interest on its bonds outstanding. the bonds were issued to
finance construction of a new hospital wing. In its statement of cash flows, the interest should
be shown as a cash outflow attributable to... - Answer✔Capital financing activities
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NFP Final Exam Review Chapter 14
Questions And Answers |Latest 2025 |
Guaranteed Pass.
In what significant ways would each of the 3 major statements of a gov't hospital differ from
those of a private NFP hospital? - Answer✔Private NFP hospitals have to follow the provisions
of FASB ASU No. 2016-14 as to the form and content of their financial statements. the balance
sheet of a NFP hospital , but not a gov't hospital, must display the two categories of donor
restrictiveness. Gov't healthcare entities do not have a statement comparable to the statement
of changes in net assets.
What are the major categories of revenues and expenses for a health-care org? - Answer✔The
major categories of revenues for a health care org are divided into at least 2 classifications,
patient care revenues and other revenues. Patient care revenues include routine services, other
nursing services, and professional services. Other revenues include auxiliary sales, fees for
educational programs, rental of facilities other than to residents, investment gains and losses
and miscellaneous sources. The major expenses of a healthcare org must be presented at a
minimum in two major categories, program service expenses and support services such as
general/admin expenses.
What are the differences between recording a hospital's expenses by natural classifications
than by function? - Answer✔Expenses may be classified using either a natural classification
(salaries, supplies, etc.) or a functional classification (impatient services, ancillary outpatient
services, etc.) If the expenses are classified using a natural classification then the functional
classifications must be presented in the notes to the financial statements.
1|P a g e
, ©BRIGHTSTARS 2025 ALL RIGHTS RESERVED 11:22 AM A+
Why is the statement of functional expenses requied for voluntary health and welfare
organizations? - Answer✔The statement of functional expenses is required for NFP orgs,
because for most of these entities major source source of revenues is from donations rather
than from the sale of goods or services.
What are capitation fees and how should they be accounted for? - Answer✔Capitation fees are
those received in exchange for a health care orgs agreement either with an individual or with a
company to provide specified services to a specified population during a specified period of
time. The fees are based on the number of persons covered and on expected costs to be
incurred rather than on actual services provided. Revenues from capitation fees should
generally be shown apart from other types of revenues and should be accounted for over the
period covered, not as services provided.
Hospitals and other health-care organizations provide services knowing that hey will collect
from third-party payers, such as insurance companies, considerably less than their established
billing rates. In addition, they provide services to uninsured patients and are aware that they
will collect either none or only a small portion of the amounts to be billed. Comment on how
these orgs distinguish between charity care, bad debts, and contractual adjustments, and
indicate how each affects the amount of revenue from patient care that they should report. -
Answer✔Charity care results from a healthcare entity's policy to provide health services free of
charge to individuals who meet certain financial criteria. Since charity care is not expected to
result in cash inflows, it is not recognized either as revenue, or as receivables. Health care
entities should disclose in notes to the financial statements their policies as to the charitable
care and the value of the charity care provided which is measured based on the costs of
providing the care. Bad debt expenses represents what the entity expects to be able to collect
from parties to whom it has extended credit. Contractual adjustments are the difference
between established rates and third-party-payer payments and discounts is the difference
between established rates and the amount collectible that the entity knowingly and willingly
provides to third-party payers.
A NFP hospital pays $150,000 interest on its bonds outstanding. The bonds were issued to
finance construction of a new hospital wing. In its statement of cash flow, the interest should
be shown as a cash outflow from - Answer✔operating activities
A gov't hospital pays $150,000 in interest on its bonds outstanding. the bonds were issued to
finance construction of a new hospital wing. In its statement of cash flows, the interest should
be shown as a cash outflow attributable to... - Answer✔Capital financing activities
2|P a g e
