Test Bank for Accounting for Governmental and
Nonprofit Entities 19th Edition Reck All Chapters
Included
Student name:_
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Financial reporting standards for all hospitals are established by the FASB.
⊚ true
⊚ false
2) Patient service revenues and related receivables exclude charges for charity care services.
⊚ true
⊚ false
3) In accounting for government health care entities, the account Provision for Bad Debts should
be reported as a contra-revenue, rather than as an expense.
⊚ true
⊚ false
Version 1 390
,4) An implicit price concession exists if it is likely the not-for-profit health care entity will accept an
amount from the customer that is less than the contractually stated amount.
⊚ true
⊚ false
5) Not-for-profit hospitals are encouraged but not required to conduct and report on a
community health needs assessment every three years.
⊚ true
⊚ false
6) Not-for-profit hospitals risk losing their tax-exempt status if they fail to provide an adequate
level of charity care.
⊚ true
⊚ false
7) Under the FASB GAAP hierarchy the AICPA Audit and Accounting Guide Health Care Entities
would be category (b) authoritative guidance.
⊚ true
⊚ false
8) In accordance with the FASB Codification, an expense for diabetes research that was financed
by restricted contributions would be recorded as a decrease in net assets without donor restrictions by a
not-for-profit health care organization.
⊚ true
⊚ false
9) FASB standards require that not-for-profit health care entities prepare a statement of
changes in net assets.
⊚ true
⊚ false
10) Payment methods, such as capitation fees in prepaid healthcare plans, pose a financial risk to
hospitals if the fixed amount of revenue does not cover the costs of providing services.
Version 1 391
, ⊚ true
⊚ false
11) Under GAAP, both governmental and nongovernmental not-for-profit health care entities are
required to identify operating and nonoperating activity on their operating statements.
⊚ true
⊚ false
12) Health care is provided by organizations that can be for-profit, not-for-profit, or
governmental; although over half of all nonfederal health care is provided by not-for-profit entities.
⊚ true
⊚ false
13) Similar to other not-for-profit entities, health care entities are required under FASB
standards to report program and support functional expenses.
⊚ true
⊚ false
14) Assets set aside by the governing board for the eventual construction of a hospital
addition should be recorded as "assets limited as to use."
⊚ true
⊚ false
15) A nongovernmental not-for-profit health care entity would report the net asset categories
unrestricted, restricted, and net investment in capital assets.
⊚ true
⊚ false
16) Continuing care retirement communities (CCRC) provide residential care in a facility, along
with some level of long-term medical care, that is less intensive than hospital care.
⊚ true
⊚ false
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, 17) All health care organizations report investments at fair value and report unrealized gains or
losses on the statement of operations.
⊚ true
⊚ false
18) The “equity” section (assets minus liabilities) of a health care entity’s balance sheet or statement
of net position will indicate whether the health care organization is for-profit, not-for- profit, or
governmental.
⊚ true
⊚ false
19) A contractual adjustment is recorded as a contra-revenue account.
⊚ true
⊚ false
20) The goal of financial and operational analysis of a health care entity is to determine if the entity is
profitable.
⊚ true
⊚ false
21) Similar to for-profit entities, under FASB standards, not-for-profit health care entities are required
to classify investmentsin debt securities into trading, available-for-sale, and held to maturity for reporting
purposes.
⊚ true
⊚ false
22) The purpose of a performance indicator is to provide an operating measure for not-for- profit
health care organizations that is equivalent to income from continuing operations of for- profit health
care organizations.
⊚ true
⊚ false
Version 1 393
Nonprofit Entities 19th Edition Reck All Chapters
Included
Student name:_
TRUE/FALSE - Write 'T' if the statement is true and 'F' if the statement is false.
1) Financial reporting standards for all hospitals are established by the FASB.
⊚ true
⊚ false
2) Patient service revenues and related receivables exclude charges for charity care services.
⊚ true
⊚ false
3) In accounting for government health care entities, the account Provision for Bad Debts should
be reported as a contra-revenue, rather than as an expense.
⊚ true
⊚ false
Version 1 390
,4) An implicit price concession exists if it is likely the not-for-profit health care entity will accept an
amount from the customer that is less than the contractually stated amount.
⊚ true
⊚ false
5) Not-for-profit hospitals are encouraged but not required to conduct and report on a
community health needs assessment every three years.
⊚ true
⊚ false
6) Not-for-profit hospitals risk losing their tax-exempt status if they fail to provide an adequate
level of charity care.
⊚ true
⊚ false
7) Under the FASB GAAP hierarchy the AICPA Audit and Accounting Guide Health Care Entities
would be category (b) authoritative guidance.
⊚ true
⊚ false
8) In accordance with the FASB Codification, an expense for diabetes research that was financed
by restricted contributions would be recorded as a decrease in net assets without donor restrictions by a
not-for-profit health care organization.
⊚ true
⊚ false
9) FASB standards require that not-for-profit health care entities prepare a statement of
changes in net assets.
⊚ true
⊚ false
10) Payment methods, such as capitation fees in prepaid healthcare plans, pose a financial risk to
hospitals if the fixed amount of revenue does not cover the costs of providing services.
Version 1 391
, ⊚ true
⊚ false
11) Under GAAP, both governmental and nongovernmental not-for-profit health care entities are
required to identify operating and nonoperating activity on their operating statements.
⊚ true
⊚ false
12) Health care is provided by organizations that can be for-profit, not-for-profit, or
governmental; although over half of all nonfederal health care is provided by not-for-profit entities.
⊚ true
⊚ false
13) Similar to other not-for-profit entities, health care entities are required under FASB
standards to report program and support functional expenses.
⊚ true
⊚ false
14) Assets set aside by the governing board for the eventual construction of a hospital
addition should be recorded as "assets limited as to use."
⊚ true
⊚ false
15) A nongovernmental not-for-profit health care entity would report the net asset categories
unrestricted, restricted, and net investment in capital assets.
⊚ true
⊚ false
16) Continuing care retirement communities (CCRC) provide residential care in a facility, along
with some level of long-term medical care, that is less intensive than hospital care.
⊚ true
⊚ false
Version 1 392
, 17) All health care organizations report investments at fair value and report unrealized gains or
losses on the statement of operations.
⊚ true
⊚ false
18) The “equity” section (assets minus liabilities) of a health care entity’s balance sheet or statement
of net position will indicate whether the health care organization is for-profit, not-for- profit, or
governmental.
⊚ true
⊚ false
19) A contractual adjustment is recorded as a contra-revenue account.
⊚ true
⊚ false
20) The goal of financial and operational analysis of a health care entity is to determine if the entity is
profitable.
⊚ true
⊚ false
21) Similar to for-profit entities, under FASB standards, not-for-profit health care entities are required
to classify investmentsin debt securities into trading, available-for-sale, and held to maturity for reporting
purposes.
⊚ true
⊚ false
22) The purpose of a performance indicator is to provide an operating measure for not-for- profit
health care organizations that is equivalent to income from continuing operations of for- profit health
care organizations.
⊚ true
⊚ false
Version 1 393
