HSMA 4055 ch 6-14 || 100% Correct Solutions.
Which of the following is not part of a business's strategic plan?
Mission statement
Values statement
Goals
Capital budget
Objectives correct answers Capital budget
Budgets are used for which of the following?
Planning
Communication
Control
Both a and b
All of the above correct answers All of the above
Which of the following statements about budgeting is incorrect?
a. In the conventional approach, the prior budget is used as the starting point.
b. In zero-based budgeting, the prior budget is adopted for the coming year with no changes.
c. All organizations use annual budgets, but most also use quarterly (or more frequent) budgets.
d. Out-year budgets are used more for planning purposes than for control.
e. Bottom-up budgets begin at department level and then are approved by senior management.
correct answers b. In zero-based budgeting, the prior budget is adopted for the coming year with
no changes.
In budgeting, which of the following best describes variance?
a. A measure of the degree of dispersion of a distribution about its mean value
b. The difference between a realized value and a budgeted, or standard, value
c. The percentage decrease in volume that can occur without causing the organization to lose
money
d. The difference between operating profit and total profit
e. The difference between total revenues and total costs correct answers b. The difference
between a realized value and a budgeted, or standard, value
Which of the following statements about a flexible budget is most correct?
a. A flexible budget uses realized (actual) prices along with all other original (simple) budget
assumptions.
b. A flexible budget uses realized (actual) labor costs along with all other original (simple)
budget assumptions.
c. A flexible budget uses realized (actual) supplies costs along with all other original (simple)
budget assumptions.
,d. A flexible budget uses realized (actual) facilities costs along with all other original (simple)
budget assumptions.
e. A flexible budget uses realized (actual) volume along with all other original (simple) budget
assumptions. correct answers e. A flexible budget uses realized (actual) volume along with all
other original (simple) budget assumptions.
The following profit information was taken from Eastside Hospital's budget data:
Simple budget: $1,200,000
Flexible budget: $1,000,000
Actual results: $ 500,000
What is the simple profit variance? (Hint: An unfavorable variance is identified by a minus sign.)
correct answers -$700,000
The following profit information was taken from Eastside Hospital's budget data:
Simple budget: $1,200,000
Flexible budget: $1,000,000
Actual results: $ 500,000
What is the flexible profit variance? (Hint: An unfavorable variance is identified by a minus
sign.) correct answers -$500,000
Assume that the simple profit variance is -$200,000 while the flexible profit variance is +
$200,000. Which of the following statements about this situation is most correct?
a. When the volume forecast error is accounted for, the business lost money.
b. When the volume forecast error is accounted for, the business broke even.
c. The business actually made a profit of $200,000.
d. The business actually made a profit of $400,000.
e. When the volume forecast error is accounted for, the business made money. correct answers e.
When the volume forecast error is accounted for, the business made money.
Which of the following statements represents an organizational objective (as opposed to an
organizational goal)?
a. To increase inpatient volume by 3 percent per year
b. To increase market share
c. To provide high-quality care
d. To maintain a financial condition that permits us to invest in new technology
e. To implement electronic medical records as quickly as possible correct answers a. To increase
inpatient volume by 3 percent per year
A hospital outpatient department budgets for 15,000 visits per year. At the end of the year, the
hospital has 12,000 patient visits. When comparing the flexible budget to the simple budget,
which of the following will be true?
a. Total expenses in the flexible budget will be lower than in the simple budget.
b. Total expenses in the flexible budget will be higher than in the simple budget.
, c. Total revenues in the flexible budget will be lower than in the simple budget.
d. Total revenues in the flexible budget will be higher than in the simple budget.
e. Both a and c are correct. correct answers e. Both a and c are correct.
Which of the following variances is a hospital manager most likely to be held accountable for?
a. Labor variance
b. Supplies variance
c. Volume variance
d. Both a and b
e. All of the above correct answers d. Both a and b
True or false: The operating plan focuses on how a business plans to meet the goals and
objectives contained in the strategic plan. correct answers True
True or false: To be most effective, budgets must be thought of as financial staff tools. correct
answers False
True or false: Small organizations may use a single operating budget in place of multiple
budgets. correct answers True
True or false: A variance analysis using a flexible budget highlights changes that result from
"managerial" factors, as opposed to changes that result from volume forecast errors. correct
answers True
Which of the following statements best describes the revenue cycle?
a. It focuses on cash management.
b. It focuses on inventory management.
c. It focuses on receivables management.
d. It focuses on cash, inventory, and receivables management.
e. It focuses on all activities associated with billing and collecting for services. correct answers e.
It focuses on all activities associated with billing and collecting for services.
The revenue cycle consists of which of the following?
a. Before-service activities
b. At-service activities
c. After-service activities
d. Monitoring and reporting activities
e. All of the above activities correct answers e. All of the above activities
Which of the following techniques are used to monitor a business's receivables?
a. Average collection period
b. Aging schedule
Which of the following is not part of a business's strategic plan?
Mission statement
Values statement
Goals
Capital budget
Objectives correct answers Capital budget
Budgets are used for which of the following?
Planning
Communication
Control
Both a and b
All of the above correct answers All of the above
Which of the following statements about budgeting is incorrect?
a. In the conventional approach, the prior budget is used as the starting point.
b. In zero-based budgeting, the prior budget is adopted for the coming year with no changes.
c. All organizations use annual budgets, but most also use quarterly (or more frequent) budgets.
d. Out-year budgets are used more for planning purposes than for control.
e. Bottom-up budgets begin at department level and then are approved by senior management.
correct answers b. In zero-based budgeting, the prior budget is adopted for the coming year with
no changes.
In budgeting, which of the following best describes variance?
a. A measure of the degree of dispersion of a distribution about its mean value
b. The difference between a realized value and a budgeted, or standard, value
c. The percentage decrease in volume that can occur without causing the organization to lose
money
d. The difference between operating profit and total profit
e. The difference between total revenues and total costs correct answers b. The difference
between a realized value and a budgeted, or standard, value
Which of the following statements about a flexible budget is most correct?
a. A flexible budget uses realized (actual) prices along with all other original (simple) budget
assumptions.
b. A flexible budget uses realized (actual) labor costs along with all other original (simple)
budget assumptions.
c. A flexible budget uses realized (actual) supplies costs along with all other original (simple)
budget assumptions.
,d. A flexible budget uses realized (actual) facilities costs along with all other original (simple)
budget assumptions.
e. A flexible budget uses realized (actual) volume along with all other original (simple) budget
assumptions. correct answers e. A flexible budget uses realized (actual) volume along with all
other original (simple) budget assumptions.
The following profit information was taken from Eastside Hospital's budget data:
Simple budget: $1,200,000
Flexible budget: $1,000,000
Actual results: $ 500,000
What is the simple profit variance? (Hint: An unfavorable variance is identified by a minus sign.)
correct answers -$700,000
The following profit information was taken from Eastside Hospital's budget data:
Simple budget: $1,200,000
Flexible budget: $1,000,000
Actual results: $ 500,000
What is the flexible profit variance? (Hint: An unfavorable variance is identified by a minus
sign.) correct answers -$500,000
Assume that the simple profit variance is -$200,000 while the flexible profit variance is +
$200,000. Which of the following statements about this situation is most correct?
a. When the volume forecast error is accounted for, the business lost money.
b. When the volume forecast error is accounted for, the business broke even.
c. The business actually made a profit of $200,000.
d. The business actually made a profit of $400,000.
e. When the volume forecast error is accounted for, the business made money. correct answers e.
When the volume forecast error is accounted for, the business made money.
Which of the following statements represents an organizational objective (as opposed to an
organizational goal)?
a. To increase inpatient volume by 3 percent per year
b. To increase market share
c. To provide high-quality care
d. To maintain a financial condition that permits us to invest in new technology
e. To implement electronic medical records as quickly as possible correct answers a. To increase
inpatient volume by 3 percent per year
A hospital outpatient department budgets for 15,000 visits per year. At the end of the year, the
hospital has 12,000 patient visits. When comparing the flexible budget to the simple budget,
which of the following will be true?
a. Total expenses in the flexible budget will be lower than in the simple budget.
b. Total expenses in the flexible budget will be higher than in the simple budget.
, c. Total revenues in the flexible budget will be lower than in the simple budget.
d. Total revenues in the flexible budget will be higher than in the simple budget.
e. Both a and c are correct. correct answers e. Both a and c are correct.
Which of the following variances is a hospital manager most likely to be held accountable for?
a. Labor variance
b. Supplies variance
c. Volume variance
d. Both a and b
e. All of the above correct answers d. Both a and b
True or false: The operating plan focuses on how a business plans to meet the goals and
objectives contained in the strategic plan. correct answers True
True or false: To be most effective, budgets must be thought of as financial staff tools. correct
answers False
True or false: Small organizations may use a single operating budget in place of multiple
budgets. correct answers True
True or false: A variance analysis using a flexible budget highlights changes that result from
"managerial" factors, as opposed to changes that result from volume forecast errors. correct
answers True
Which of the following statements best describes the revenue cycle?
a. It focuses on cash management.
b. It focuses on inventory management.
c. It focuses on receivables management.
d. It focuses on cash, inventory, and receivables management.
e. It focuses on all activities associated with billing and collecting for services. correct answers e.
It focuses on all activities associated with billing and collecting for services.
The revenue cycle consists of which of the following?
a. Before-service activities
b. At-service activities
c. After-service activities
d. Monitoring and reporting activities
e. All of the above activities correct answers e. All of the above activities
Which of the following techniques are used to monitor a business's receivables?
a. Average collection period
b. Aging schedule
