TEST BANK For Brigham & Houston, Fundamentals of
Financial Management, Concise Edition 10th edition
Do health care facilities typically operate as public or private sector activities? -
ANSWER:Both
Who maintains public sector activities? - ANSWER:Local, county, state, or federal
entities (i.e. Government)
Who owns/manages organizations in private sector? - ANSWER:Person or
organizations in non-governmental organizations
True or false?
Private sector activities receive no funding or income from government sources. -
ANSWER:False, private sectors may still receive funding from the government
although they remain private activities
What are the two types of private operations? - ANSWER:For profit and non-for-
profit
What is a for-profit private organization? - ANSWER:An organization that is privately
owned has the primary goal to obtain profits and must pay income taxes on those
profits.
What is a not-for-profit organization? - ANSWER:Not-for-profit organizations have a
main goal that focuses on something other than money, such as helping the
community and is concerned with money only as much as it helps to achieve the
organizations goals, rather than to distribute it to it's shareholders.
In what cases are non-profits liable for state and federal income taxes? -
ANSWER:It's taxed on earnings that fall outside of the scope of it's non-profit status
What is a proprietorship? - ANSWER:See lecture
What is a partnership? - ANSWER:See lecture
What is a corporation? - ANSWER:See lecture
What primary SOURCE of information must the manager have to help plan and later
evaluate the outcome of operations? - ANSWER:The organizations fininacial
accounting system
What forms the framework or financial accounting? - ANSWER:Periodic financial
statements
True or false?
, The periodic financial statements reflect the structure of the business as a whole. -
ANSWER:True
What is a balance sheet? - ANSWER:A document representing the financial position
of a organization at a particular point, typically the end of an accounting period.
What are assets? - ANSWER:Represent the resources of ana organization
What are liabilities? - ANSWER:The obligations that an organization has to creditors.
What is the owners equity? - ANSWER:The "book value" of an organization
How does owners equity relate to for-profit organizations? - ANSWER:It is made up
of capital stock; retained earnings represent the company's earnings over time minus
any *dividends distributed*.
How does owners equity relate to not-for-profit organizations? - ANSWER:Equity is
represented by either the term "net assets" or "excess of assets over liabilities"
because such an organization has *no capital shareholders*
What is the income statement? - ANSWER:Presents the financial results of an
organization over a stated period of time. Important to know if it's for or not-for-
profit
What is the income statement referred to in a for-profit organization? - ANSWER:Net
Income
What is the income statement referred to in a not-for-profit organization? -
ANSWER:Excess revenues over expenses
Define accrual accounting - ANSWER:Revenues are recognized or reflected in an
income statement when they are EARNED not when they are COLLECTED.
Define cash basis accounting - ANSWER:Revenues are NOT reflected until the cash
payment is received and expenses are not reflected until payment is made for the
purchase. (Not a valid representation of an organizations financial position)
What is revenue? - ANSWER:Reflects the earning of the organization, both collected
or yet to be collected.
Define Expenses - ANSWER:Charges to the income statement as they are incurred
What is an inventory? - ANSWER:Value of merchandise that has been purchased for
resale but at the date of the financial report is *unsold*. (Businesses try to minimizes
inventories as much as possible)
Financial Management, Concise Edition 10th edition
Do health care facilities typically operate as public or private sector activities? -
ANSWER:Both
Who maintains public sector activities? - ANSWER:Local, county, state, or federal
entities (i.e. Government)
Who owns/manages organizations in private sector? - ANSWER:Person or
organizations in non-governmental organizations
True or false?
Private sector activities receive no funding or income from government sources. -
ANSWER:False, private sectors may still receive funding from the government
although they remain private activities
What are the two types of private operations? - ANSWER:For profit and non-for-
profit
What is a for-profit private organization? - ANSWER:An organization that is privately
owned has the primary goal to obtain profits and must pay income taxes on those
profits.
What is a not-for-profit organization? - ANSWER:Not-for-profit organizations have a
main goal that focuses on something other than money, such as helping the
community and is concerned with money only as much as it helps to achieve the
organizations goals, rather than to distribute it to it's shareholders.
In what cases are non-profits liable for state and federal income taxes? -
ANSWER:It's taxed on earnings that fall outside of the scope of it's non-profit status
What is a proprietorship? - ANSWER:See lecture
What is a partnership? - ANSWER:See lecture
What is a corporation? - ANSWER:See lecture
What primary SOURCE of information must the manager have to help plan and later
evaluate the outcome of operations? - ANSWER:The organizations fininacial
accounting system
What forms the framework or financial accounting? - ANSWER:Periodic financial
statements
True or false?
, The periodic financial statements reflect the structure of the business as a whole. -
ANSWER:True
What is a balance sheet? - ANSWER:A document representing the financial position
of a organization at a particular point, typically the end of an accounting period.
What are assets? - ANSWER:Represent the resources of ana organization
What are liabilities? - ANSWER:The obligations that an organization has to creditors.
What is the owners equity? - ANSWER:The "book value" of an organization
How does owners equity relate to for-profit organizations? - ANSWER:It is made up
of capital stock; retained earnings represent the company's earnings over time minus
any *dividends distributed*.
How does owners equity relate to not-for-profit organizations? - ANSWER:Equity is
represented by either the term "net assets" or "excess of assets over liabilities"
because such an organization has *no capital shareholders*
What is the income statement? - ANSWER:Presents the financial results of an
organization over a stated period of time. Important to know if it's for or not-for-
profit
What is the income statement referred to in a for-profit organization? - ANSWER:Net
Income
What is the income statement referred to in a not-for-profit organization? -
ANSWER:Excess revenues over expenses
Define accrual accounting - ANSWER:Revenues are recognized or reflected in an
income statement when they are EARNED not when they are COLLECTED.
Define cash basis accounting - ANSWER:Revenues are NOT reflected until the cash
payment is received and expenses are not reflected until payment is made for the
purchase. (Not a valid representation of an organizations financial position)
What is revenue? - ANSWER:Reflects the earning of the organization, both collected
or yet to be collected.
Define Expenses - ANSWER:Charges to the income statement as they are incurred
What is an inventory? - ANSWER:Value of merchandise that has been purchased for
resale but at the date of the financial report is *unsold*. (Businesses try to minimizes
inventories as much as possible)
