HCAD 760 EXAMS SCRIPT 2025/2026 QUESTIONS WITH
ANSWERS TAGGED A+
✔✔Identify all of the different types of managed care insurance plans - ✔✔HMOs, POS
plans, PPOs
✔✔Relative value units (RVUs) are standards that are payment components consisting
of the following: - ✔✔Work expense; malpractice/liability expense; practice expenses
✔✔For insurance to "work", it must have these basic characteristics - ✔✔Payment only
for random (unforeseen and unexpected) losses; risk transfer; pooling of losses
✔✔Under the PPACA, insurance companies have to use community ratings - ✔✔True
✔✔Materiality - ✔✔GAAP Constraint
✔✔Expense Matching - ✔✔GAAP Principle
✔✔Going Concern - ✔✔GAAP Assumption
✔✔Operating income - ✔✔Is a measure of the income generated from the "core"
business of the organization
✔✔Profitability of the Organizations - ✔✔Often what individuals assessing income
statements are trying to understand
✔✔net income - ✔✔often referred to as the bottom line
✔✔non-operating income - ✔✔reports income from activities not related to "core"
business of the organization.
✔✔Accrual accounting - ✔✔The reason why operating revenues may not represent the
actual amount of cash received
✔✔Net patient service revenue - ✔✔Payments for services provided (after the provision
for bad debts is considered)
✔✔Salaries and benefits - ✔✔Typically, the largest expense of a healthcare
organization
✔✔Expenses - ✔✔Represent the resources used to create revenues
✔✔Generally accepted accounting principles (GAAP) - ✔✔A set of guidelines needed
for the preparation of financial accounting statements
, ✔✔Securities and exchanges commission (SEC) - ✔✔Agency that has the legal
authority to regulate the form and content of financial statements of publicly traded
companies
✔✔Cash accounting - ✔✔Recognizes income when cash is received
✔✔Accrual accounting - ✔✔Recognizes income when a cash obligation is created
✔✔Financial accounting information is conveyed by a business's financial statements.
The four most important are: - ✔✔Balance sheet; statement of cash flows; income
statement; statement of changes in equity
✔✔There are other names for an income statement - ✔✔Statement of operations;
statement of revenues and expenses; statement of activities
✔✔The income statement reports the results of the operations - ✔✔Over some period
of time
✔✔Depreciation expense is best explained by - ✔✔Expense matching principle
✔✔The amount of taxes saved by depreciation is called the - ✔✔Depreciation tax shield
✔✔In a not for profit corporation - ✔✔The entire amount of net income is reinvested in
the business
✔✔Inventories - ✔✔Current assets
✔✔Fixed assets - ✔✔Net property and equipment
✔✔Accrued expenses - ✔✔Current liabilities
✔✔Accounts payable - ✔✔Current liabilities
✔✔Net patient accounts receivable - ✔✔Current assets
✔✔Debt instruments with financing greater than one year - ✔✔Long term debt
✔✔A balance sheet contains information about an organization's - ✔✔Equity; liabilities;
assets
✔✔Examples of common current liabilities are - ✔✔Accrued expenses; accounts
payable; notes payable
ANSWERS TAGGED A+
✔✔Identify all of the different types of managed care insurance plans - ✔✔HMOs, POS
plans, PPOs
✔✔Relative value units (RVUs) are standards that are payment components consisting
of the following: - ✔✔Work expense; malpractice/liability expense; practice expenses
✔✔For insurance to "work", it must have these basic characteristics - ✔✔Payment only
for random (unforeseen and unexpected) losses; risk transfer; pooling of losses
✔✔Under the PPACA, insurance companies have to use community ratings - ✔✔True
✔✔Materiality - ✔✔GAAP Constraint
✔✔Expense Matching - ✔✔GAAP Principle
✔✔Going Concern - ✔✔GAAP Assumption
✔✔Operating income - ✔✔Is a measure of the income generated from the "core"
business of the organization
✔✔Profitability of the Organizations - ✔✔Often what individuals assessing income
statements are trying to understand
✔✔net income - ✔✔often referred to as the bottom line
✔✔non-operating income - ✔✔reports income from activities not related to "core"
business of the organization.
✔✔Accrual accounting - ✔✔The reason why operating revenues may not represent the
actual amount of cash received
✔✔Net patient service revenue - ✔✔Payments for services provided (after the provision
for bad debts is considered)
✔✔Salaries and benefits - ✔✔Typically, the largest expense of a healthcare
organization
✔✔Expenses - ✔✔Represent the resources used to create revenues
✔✔Generally accepted accounting principles (GAAP) - ✔✔A set of guidelines needed
for the preparation of financial accounting statements
, ✔✔Securities and exchanges commission (SEC) - ✔✔Agency that has the legal
authority to regulate the form and content of financial statements of publicly traded
companies
✔✔Cash accounting - ✔✔Recognizes income when cash is received
✔✔Accrual accounting - ✔✔Recognizes income when a cash obligation is created
✔✔Financial accounting information is conveyed by a business's financial statements.
The four most important are: - ✔✔Balance sheet; statement of cash flows; income
statement; statement of changes in equity
✔✔There are other names for an income statement - ✔✔Statement of operations;
statement of revenues and expenses; statement of activities
✔✔The income statement reports the results of the operations - ✔✔Over some period
of time
✔✔Depreciation expense is best explained by - ✔✔Expense matching principle
✔✔The amount of taxes saved by depreciation is called the - ✔✔Depreciation tax shield
✔✔In a not for profit corporation - ✔✔The entire amount of net income is reinvested in
the business
✔✔Inventories - ✔✔Current assets
✔✔Fixed assets - ✔✔Net property and equipment
✔✔Accrued expenses - ✔✔Current liabilities
✔✔Accounts payable - ✔✔Current liabilities
✔✔Net patient accounts receivable - ✔✔Current assets
✔✔Debt instruments with financing greater than one year - ✔✔Long term debt
✔✔A balance sheet contains information about an organization's - ✔✔Equity; liabilities;
assets
✔✔Examples of common current liabilities are - ✔✔Accrued expenses; accounts
payable; notes payable
