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Chapter 18: Budgeting Basics for Nurses Cherry: Contemporary Nursing: Issues, Trends,
and Management, 9th Edition
MULTIPLE CHOICE
1. A nurse manager plans the fiscal budget to include salaries for two RNs for two 12-hour shifts
with a patient census of 6 in the short-stay observation room. The nurse manager reviews the
budget report 3 months later and notes that the salary expenses are higher than was budgeted
because of higher-than-planned RN staff salaries. This additional RN staff is necessary to
meet patient care needs because the census has remained constant at 10 patients rather than
the 6 projected when the budget was developed. The difference between the planned budget
and the actual cost is referred to by what term? a. Revenue
b. Variance
c. Zero-based budgeting
d. Capital expenditures
ANS: B
Variance is the difference between the planned budget and actual results; it can be a positive
or a negative discrepancy. Revenue is the money that a health care organization receives in
exchange for providing health care or other related services through normal business
activities; synonymous with income. Zero-based budgeting is an approach to budget
development that begins as though the budget were being prepared for the first time. Capital
expenditures are the amount spent on items that will have long-term (greater than 1 year)
value to an organization; typically includes buildings and equipment.
DIF:Comprehension
2. A nursing unit‘s census consists primarily of long-term residents with a high risk for falls. To
meet new safety regulations, the nurse manager must plan to replace all 50 patient beds with
new beds equipped with Fall Watch electronic sensors. The manager will be involved in
which type of budgeting to replace the beds? a. Fiscal
b. Labor
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c. Operational
d. Capital
ANS: D
Capital budgets are concerned with major purchases such as equipment paid for over several
years. Fiscal is a general term used to refer to financial planning and budgeting. Labor is a
term used to refer to staff/personnel. Operational budgeting relates to the expenses and
revenue generated by, in this case, a nursing unit.
DIF:Comprehension
3. A nurse manager is preparing a budget that does not base annual budgets on the revenue and
expenditures of the prior year and has the advantage that outdated information is not
integrated into the budget. The manager is using which budget method? a. Zero-based
b. Incremental
c. Labor
d. Operational
ANS: A
The zero-based method assumes of no volume and no resources assigned; it essentially starts
each new budget period at zero rather than building from past budgets. The incremental
approach is simply a forward trend of recent performance with adjustments for future
growth or decline in revenues or expenses.
DIF:Comprehension
4. A nurse on the unit is heard saying, ―I am not going to document that I used four catheters to
start that IV; it doesn‘t matter anyway.‖ What action can help the staff nurse understand the
financial budget goals of the unit?
a. Have the nurse work in payroll for a week.
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Chapter 18: Budgeting Basics for Nurses Cherry: Contemporary Nursing: Issues, Trends,
and Management, 9th Edition
MULTIPLE CHOICE
1. A nurse manager plans the fiscal budget to include salaries for two RNs for two 12-hour shifts
with a patient census of 6 in the short-stay observation room. The nurse manager reviews the
budget report 3 months later and notes that the salary expenses are higher than was budgeted
because of higher-than-planned RN staff salaries. This additional RN staff is necessary to
meet patient care needs because the census has remained constant at 10 patients rather than
the 6 projected when the budget was developed. The difference between the planned budget
and the actual cost is referred to by what term? a. Revenue
b. Variance
c. Zero-based budgeting
d. Capital expenditures
ANS: B
Variance is the difference between the planned budget and actual results; it can be a positive
or a negative discrepancy. Revenue is the money that a health care organization receives in
exchange for providing health care or other related services through normal business
activities; synonymous with income. Zero-based budgeting is an approach to budget
development that begins as though the budget were being prepared for the first time. Capital
expenditures are the amount spent on items that will have long-term (greater than 1 year)
value to an organization; typically includes buildings and equipment.
DIF:Comprehension
2. A nursing unit‘s census consists primarily of long-term residents with a high risk for falls. To
meet new safety regulations, the nurse manager must plan to replace all 50 patient beds with
new beds equipped with Fall Watch electronic sensors. The manager will be involved in
which type of budgeting to replace the beds? a. Fiscal
b. Labor
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this document is illegal extra per year?
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c. Operational
d. Capital
ANS: D
Capital budgets are concerned with major purchases such as equipment paid for over several
years. Fiscal is a general term used to refer to financial planning and budgeting. Labor is a
term used to refer to staff/personnel. Operational budgeting relates to the expenses and
revenue generated by, in this case, a nursing unit.
DIF:Comprehension
3. A nurse manager is preparing a budget that does not base annual budgets on the revenue and
expenditures of the prior year and has the advantage that outdated information is not
integrated into the budget. The manager is using which budget method? a. Zero-based
b. Incremental
c. Labor
d. Operational
ANS: A
The zero-based method assumes of no volume and no resources assigned; it essentially starts
each new budget period at zero rather than building from past budgets. The incremental
approach is simply a forward trend of recent performance with adjustments for future
growth or decline in revenues or expenses.
DIF:Comprehension
4. A nurse on the unit is heard saying, ―I am not going to document that I used four catheters to
start that IV; it doesn‘t matter anyway.‖ What action can help the staff nurse understand the
financial budget goals of the unit?
a. Have the nurse work in payroll for a week.
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this document is illegal extra per year?
