MHA 706 - MODULE 2
Financial accounting - answer involves identifying, recording, and communicating the
operation results and status of an organization.
Financial accounting information is conveyed by financial statements- the four most
important are: - answer-Income statement
-Statements of changes in equity.
-Balance sheet
-Statement of cash flows
The point of finance is - answer understanding the financial data, and then using it to
analyze the financial condition of an organization.
Financial accounting information is driven by the need of - answer outsiders to have
reliable information regarding the financial status of an organization.
Financial accounting is important to managers because it provides - answer-consistent
audited view of an organizations financial position
-easily comparable to similar organizations
The SEC has legal authority to: - answer-regulate the form and content of financial
statements
The SEC relies on these 3 organizations for implementation: - answer-Financial
Accounting Standards Board (FASB)
-Industry Committees of the American Institute of Certified Public Accountants (AICPA)
-Principles & Practices Board of Healthcare Financial Management Association (HFMA)
GAAP applies only to: - answer-financial accounting statements (as opposed to
statements for internal use)
GAAP concepts are broken into 3 categories: - answer-Assumptions (4)
-Principles (4)
-Contraints (2)
GAAP Assumptions (4): - answer-Accounting entity: specific entity for statements can
be defined.
-Going concern: assumed that the entity will have an indefinite lifetime (not to be
liquidated)
-Periodicity: time period applicable to statements can be defined.
Monetary unit: monetary unit of measurement can be defined.
, GAAP Principles (4): - answer-Historical cost: requires most assets to be values at
acquisition, not current value
-Revenue Recognition: revenue must be recognized in the period in which they are
realizable and earned
-Expense matching: expenses must be match to related revenues
-Full disclosure: statements must contain complete picture of financial events of org.
GAAP Contraints (2): - answer-Materiality: only entries that are important to operational
and financial status need to be separately identified.
-Cost-Benefit: only relevant info that potential user might find relevant should be
reported.
Cash accounting recognizes an event when a - answer-cash transaction takes place
Accrual accounting recognizes an event when a - answer-cash obligation is created
chart of accounts corresponds to - answerunique numeric identifiers to individual
accounts (transactions are linked to account numbers.)
journal data is used to create - answer-income statement
-statement of changes in equity
-balance sheet
-statement of cash flows
income statement has 3 key elements: - answer-revenues: cash received & payer
obligations
-expenses: resource expenditures required to produce revenues
-Profit= revenues - expenses (yields operating income & net profit)
patient service revenue - answer-represents the amount based on payer contracts as
opposed to charge master prices
-include only fee-for-service (FFS) revenue
premium revenue reports - answer
MODULE 2 PART 1 - answer
Natural classification of expenses includes - answersalaries, supplies, research, etc
Functional classification of expenses includes - answerinpatient services, outpatient
services, etc
For supplies expense we show - answerthe amount consumed, not the amount
purchased.
Financial accounting - answer involves identifying, recording, and communicating the
operation results and status of an organization.
Financial accounting information is conveyed by financial statements- the four most
important are: - answer-Income statement
-Statements of changes in equity.
-Balance sheet
-Statement of cash flows
The point of finance is - answer understanding the financial data, and then using it to
analyze the financial condition of an organization.
Financial accounting information is driven by the need of - answer outsiders to have
reliable information regarding the financial status of an organization.
Financial accounting is important to managers because it provides - answer-consistent
audited view of an organizations financial position
-easily comparable to similar organizations
The SEC has legal authority to: - answer-regulate the form and content of financial
statements
The SEC relies on these 3 organizations for implementation: - answer-Financial
Accounting Standards Board (FASB)
-Industry Committees of the American Institute of Certified Public Accountants (AICPA)
-Principles & Practices Board of Healthcare Financial Management Association (HFMA)
GAAP applies only to: - answer-financial accounting statements (as opposed to
statements for internal use)
GAAP concepts are broken into 3 categories: - answer-Assumptions (4)
-Principles (4)
-Contraints (2)
GAAP Assumptions (4): - answer-Accounting entity: specific entity for statements can
be defined.
-Going concern: assumed that the entity will have an indefinite lifetime (not to be
liquidated)
-Periodicity: time period applicable to statements can be defined.
Monetary unit: monetary unit of measurement can be defined.
, GAAP Principles (4): - answer-Historical cost: requires most assets to be values at
acquisition, not current value
-Revenue Recognition: revenue must be recognized in the period in which they are
realizable and earned
-Expense matching: expenses must be match to related revenues
-Full disclosure: statements must contain complete picture of financial events of org.
GAAP Contraints (2): - answer-Materiality: only entries that are important to operational
and financial status need to be separately identified.
-Cost-Benefit: only relevant info that potential user might find relevant should be
reported.
Cash accounting recognizes an event when a - answer-cash transaction takes place
Accrual accounting recognizes an event when a - answer-cash obligation is created
chart of accounts corresponds to - answerunique numeric identifiers to individual
accounts (transactions are linked to account numbers.)
journal data is used to create - answer-income statement
-statement of changes in equity
-balance sheet
-statement of cash flows
income statement has 3 key elements: - answer-revenues: cash received & payer
obligations
-expenses: resource expenditures required to produce revenues
-Profit= revenues - expenses (yields operating income & net profit)
patient service revenue - answer-represents the amount based on payer contracts as
opposed to charge master prices
-include only fee-for-service (FFS) revenue
premium revenue reports - answer
MODULE 2 PART 1 - answer
Natural classification of expenses includes - answersalaries, supplies, research, etc
Functional classification of expenses includes - answerinpatient services, outpatient
services, etc
For supplies expense we show - answerthe amount consumed, not the amount
purchased.
