MHA 706-M2 P1B EXAM QUESTIONS AND ANSWERS WITH
VERIFIED SOLUTIONS GRADED A++
Expenses
Resources used to create revenues, representing the costs of doing business.
Operating Income
Profitability measure focusing on patient service activities, a key element of the income
statement.
Non-Operating Income
Income from activities not related to patient services, such as contributions and
investment income.
Net Income
Overall economic profitability measure defined by GAAP, representing revenues over
expenses.
Net Income vs. Cash Flow
Net income does not represent cash flow due to accrual accounting; cash flow can be
approximated by adding noncash expenses like depreciation.
Depreciation Expense
Cost spread over the accounting life of long-lived assets, expensed on the income
statement as amortization.
Statement of Changes in Equity
Reconciles income statement net income with balance sheet equity; in not-for-profit
orgs, net income flows entirely to the balance sheet.
VERIFIED SOLUTIONS GRADED A++
Expenses
Resources used to create revenues, representing the costs of doing business.
Operating Income
Profitability measure focusing on patient service activities, a key element of the income
statement.
Non-Operating Income
Income from activities not related to patient services, such as contributions and
investment income.
Net Income
Overall economic profitability measure defined by GAAP, representing revenues over
expenses.
Net Income vs. Cash Flow
Net income does not represent cash flow due to accrual accounting; cash flow can be
approximated by adding noncash expenses like depreciation.
Depreciation Expense
Cost spread over the accounting life of long-lived assets, expensed on the income
statement as amortization.
Statement of Changes in Equity
Reconciles income statement net income with balance sheet equity; in not-for-profit
orgs, net income flows entirely to the balance sheet.
