NAB CORE EXAM QUESTIONS AND
ANSWERS COMPLETE RATED A
ACCURATE AND VERIFIED.
Which of the following best describes a primary difference between a not-for-
profit and a for-profit organization?
1. A for-profit organization may distribute profits to its shareholders*
2. A for-profit organization receives pledges as part of its revenue base
3. A not-for-profit organization may pay bonuses out of its profits
4. A not-for-profit organization need not record charitable contributions
Verified Answer - For-Profit vs. Not-for-Profit:
• Correct Answer: 1. A for-profit organization may distribute profits to its
shareholders.
• Explanation: A primary distinction between these types of organizations
is that for-profits can distribute profits to owners or shareholders, while
not-for-profits reinvest earnings into their mission.
What type of financial statement is derived from analysis of other statements
and has more detail on financial activity?
1. Profit and loss*
2. Cash flow
3. Changes in financial position
4. Retained earnings
Verified Answer - Derived Financial Statement:
, • Correct Answer: 1. Profit and loss.
• Explanation: A profit and loss statement provides detailed insights into
financial performance, derived from more extensive analyses of other
financial statements.
Under FIFO inventory method which supply would be used last?
1. Supply A - 12/1/16*
2. Supply B - 12/20/16
3. Supply C - 1/4/17
4. Supply D - 2/3/17
Verified Answer - FIFO Method (Inventory):
• Correct Answer: 1. Supply A - 12/1/16.
• Explanation: FIFO means the oldest inventory items (from 12/1/16) are
used or sold first.
A healthcare organization has just purchased equipment for a total cost of
$15,000. The equipment has useful life of five years and the administrator is
planning to charge a depreciation expense of $3,000 per year. Which
depreciation method is being used?
1. Sum of the years' digits depreciation
2. Declining balance depreciation
3. Straight-line depreciation*
4. Accelerated depreciation
Correct Answer: 3. Straight-line depreciation.
Explanation: Charging an equal depreciation expense each year, as in this
scenario, is characteristic of the straight-line method
,The LIFO and FIFO methods of inventory costing both account for the effects of
which of the following factors on the price of inventory?
1. Salvage value
2. Depreciation value*
3. Supply and demand
4. Inflation and deflation
Verified Answer - LIFO and FIFO Inventory Factors:
• Correct Answer: 4. Inflation and deflation.
• Explanation: These methods consider the effects of inflation and
deflation on inventory valuation.
A guest falls and is injured while visiting a healthcare organization office. Which
of the following types of insurance would cover this injury?
1. General liability insurance*
2. Property insurance
3. Professional liability insurance
4. Workers' compensation insurance
Verified Answer - Insurance Coverage for Injury:
• Correct Answer: 1. General liability insurance.
• Explanation: General liability covers injuries sustained by guests on the
property.
Most often a third party payer, such as Medicaid or a long-term insurer, will
negotiate a lower rate for services rendered. The difference of funds that is
, uncollectables between the full charges and the amount that is actually paid by
a third party payer is called __________________.
1. Expense allowances
2. Deductions from revenue
3. Contractual allowances*
4. Revenue write-off
Verified Answer - Uncollectable Funds Term:
• Correct Answer: 3. Contractual allowances.
• Explanation: This term represents the difference between billed charges
and the amount paid by third-party payers.
If overall revenue declines and census remains stable, an important financial
area to review would be __________________.
1. Balance depreciation
2. Asset allocation
3. Ancillary revenue*
4. Interest income revenue
Verified Answer - Stable Census, Declining Revenue:
• Correct Answer: 3. Ancillary revenue.
• Explanation: Ancillary revenue, such as from additional services, may
decline even when census remains steady.
When the actual supply cost substantially exceeds the expected cost, the
administrator should initially __________________.
1. Tightly control products
ANSWERS COMPLETE RATED A
ACCURATE AND VERIFIED.
Which of the following best describes a primary difference between a not-for-
profit and a for-profit organization?
1. A for-profit organization may distribute profits to its shareholders*
2. A for-profit organization receives pledges as part of its revenue base
3. A not-for-profit organization may pay bonuses out of its profits
4. A not-for-profit organization need not record charitable contributions
Verified Answer - For-Profit vs. Not-for-Profit:
• Correct Answer: 1. A for-profit organization may distribute profits to its
shareholders.
• Explanation: A primary distinction between these types of organizations
is that for-profits can distribute profits to owners or shareholders, while
not-for-profits reinvest earnings into their mission.
What type of financial statement is derived from analysis of other statements
and has more detail on financial activity?
1. Profit and loss*
2. Cash flow
3. Changes in financial position
4. Retained earnings
Verified Answer - Derived Financial Statement:
, • Correct Answer: 1. Profit and loss.
• Explanation: A profit and loss statement provides detailed insights into
financial performance, derived from more extensive analyses of other
financial statements.
Under FIFO inventory method which supply would be used last?
1. Supply A - 12/1/16*
2. Supply B - 12/20/16
3. Supply C - 1/4/17
4. Supply D - 2/3/17
Verified Answer - FIFO Method (Inventory):
• Correct Answer: 1. Supply A - 12/1/16.
• Explanation: FIFO means the oldest inventory items (from 12/1/16) are
used or sold first.
A healthcare organization has just purchased equipment for a total cost of
$15,000. The equipment has useful life of five years and the administrator is
planning to charge a depreciation expense of $3,000 per year. Which
depreciation method is being used?
1. Sum of the years' digits depreciation
2. Declining balance depreciation
3. Straight-line depreciation*
4. Accelerated depreciation
Correct Answer: 3. Straight-line depreciation.
Explanation: Charging an equal depreciation expense each year, as in this
scenario, is characteristic of the straight-line method
,The LIFO and FIFO methods of inventory costing both account for the effects of
which of the following factors on the price of inventory?
1. Salvage value
2. Depreciation value*
3. Supply and demand
4. Inflation and deflation
Verified Answer - LIFO and FIFO Inventory Factors:
• Correct Answer: 4. Inflation and deflation.
• Explanation: These methods consider the effects of inflation and
deflation on inventory valuation.
A guest falls and is injured while visiting a healthcare organization office. Which
of the following types of insurance would cover this injury?
1. General liability insurance*
2. Property insurance
3. Professional liability insurance
4. Workers' compensation insurance
Verified Answer - Insurance Coverage for Injury:
• Correct Answer: 1. General liability insurance.
• Explanation: General liability covers injuries sustained by guests on the
property.
Most often a third party payer, such as Medicaid or a long-term insurer, will
negotiate a lower rate for services rendered. The difference of funds that is
, uncollectables between the full charges and the amount that is actually paid by
a third party payer is called __________________.
1. Expense allowances
2. Deductions from revenue
3. Contractual allowances*
4. Revenue write-off
Verified Answer - Uncollectable Funds Term:
• Correct Answer: 3. Contractual allowances.
• Explanation: This term represents the difference between billed charges
and the amount paid by third-party payers.
If overall revenue declines and census remains stable, an important financial
area to review would be __________________.
1. Balance depreciation
2. Asset allocation
3. Ancillary revenue*
4. Interest income revenue
Verified Answer - Stable Census, Declining Revenue:
• Correct Answer: 3. Ancillary revenue.
• Explanation: Ancillary revenue, such as from additional services, may
decline even when census remains steady.
When the actual supply cost substantially exceeds the expected cost, the
administrator should initially __________________.
1. Tightly control products
