MHA 702 TEST 7 comprehensive questions and verified accurate solution (detailed & elaborated) Latest Update TEST!!

1. What is the primary goal of strategic financial management in a healthcare organization? A. To maximize physician salaries B. To minimize the number of employees C. To ensure long-term financial sustainability D. To secure the highest possible patient satisfaction scores ANSWER: C. To ensure long-term financial sustainability 2. Which of the following best describes the difference between accounting and finance? A. Accounting is future-oriented, while finance is historical. B. Accounting is used by managers, while finance is used by investors. C. Accounting focuses on recording historical data, while finance uses that data for future planning. D. There is no significant difference; the terms are interchangeable. ANSWER: C. Accounting focuses on recording historical data, while finance uses that data for future planning. 3. The balance sheet is based on the fundamental accounting equation: A. Assets = Liabilities + Equity B. Revenues - Expenses = Net Income C. Beginning Equity + Net Income - Dividends = Ending Equity D. Cash Inflows - Cash Outflows = Net Cash Flow ANSWER: A. Assets = Liabilities + Equity 4. On a balance sheet, "Accounts Payable" is classified as a: A. Current Asset B. Long-term Liability C. Current Liability D. Net Asset ANSWER: C. Current Liability 5. Which financial statement shows an organization's revenues and expenses over a specific period? A. Balance Sheet B. Statement of Cash Flows C. Income Statement D. Statement of Changes in Net Assets ANSWER: C. Income Statement 6. The Statement of Cash Flows is divided into three sections: Operating, Investing, and Financing. Paying dividends to shareholders would be found in which section? A. Operating Activities B. Investing Activities C. Financing Activities D. It would not appear on the Statement of Cash Flows. ANSWER: C. Financing Activities 7. In a not-for-profit hospital, the "Equity" section of the balance sheet is called: A. Shareholder's Equity B. Owner's Equity C. Net Assets D. Retained Earnings ANSWER: C. Net Assets 8. The matching principle in accounting states that: A. Expenses should be recorded in the same period as the revenues they helped to generate. B. Assets must always equal liabilities plus equity. C. All transactions must be recorded in U.S. dollars. D. Revenues should be recognized when cash is received. ANSWER: A. Expenses should be recorded in the same period as the revenues they helped to generate. 9. Which accounting method records revenue when it is earned and expenses when they are incurred, regardless of cash flow? A. Cash Basis Accounting B. Accrual Basis Accounting C. Modified Cash Basis Accounting D. Fund Accounting ANSWER: B. Accrual Basis Accounting 10. A department that incurs costs but does not directly generate revenue, such as the Human Resources department, is known as a: A. Profit Center B. Revenue Center C. Cost Center D. Investment Center ANSWER: C. Cost Center 11. A budget that is adjusted for the actual level of output or volume is called a: A. Static Budget B. Capital Budget C. Flexible Budget D. Operating Budget ANSWER: C. Flexible Budget 12. A variance is considered "unfavorable" when: A. Actual revenue is higher than budgeted revenue. B. Actual expense is lower than budgeted expense. C. Actual revenue is lower than budgeted revenue. D. The actual volume of services is higher than budgeted. ANSWER: C. Actual revenue is lower than budgeted revenue. 13. A cost that does not change in total with changes in activity volume over a relevant range is a: A. Variable Cost B. Fixed Cost C. Semi-variable Cost D. Marginal Cost ANSWER: B. Fixed Cost 14. Contribution Margin is calculated as: A. Revenue - Fixed Costs B. Revenue - Variable Costs C. Revenue - Total Costs D. Price per Unit - Variable Cost per Unit ANSWER: B. Revenue - Variable Costs 15. The point where total revenue equals total costs (both fixed and variable) is known as the: A. Margin of Safety B. Operating Leverage Point C. Break-Even Point D. Target Profit Point ANSWER: C. Break-Even Point 16. The process of distributing indirect costs (like housekeeping) to patient care departments is called: A. Cost Accounting B. Cost Allocation C. Variance Analysis D. Capital Budgeting ANSWER: B. Cost Allocation