MHA 706 Frequently Tested Exam Questions
With Verified Multiple Choice and Conceptual
Actual 100% Correct Detailed Answers
Guaranteed Pass!!Current Update!!
1. What is financial accounting? - ANSWER Financial accounting involves
identifying, recording, and communicating the operational results and
status of an organization.
2. What are the four most important financial statements? - ANSWER
Income statement, Statement of changes in equity, Balance sheet,
Statement of cash flows.
3. What drives the requirement for financial accounting information? -
ANSWER The need of outsiders to have reliable information regarding
the financial status of an organization.
4. What is GAAP? - ANSWER Generally Accepted Accounting Principles, a
set of guidelines for the preparation of financial accounting statements.
5. Which organization has the legal authority to regulate financial statements?
- ANSWER The Securities and Exchange Commission (SEC).
6. What are the four assumptions in the conceptual framework of GAAP? -
ANSWER Accounting entity, Going concern, Periodicity, Monetary unit.
,7. What does the going concern assumption imply? - ANSWER It assumes
that the entity will have an indefinite lifetime rather than be liquidated in
the near future.
8. What are the four principles of GAAP? - ANSWER Historical costs,
Revenue recognition, Expense matching, Full disclosure.
9. What does the revenue recognition principle state? - ANSWER
Revenues must be recognized in the period in which they are realizable and
earned.
10.What are the two constraints of GAAP? - ANSWER Materiality and Cost-
Benefit.
11.What is the difference between cash and accrual accounting? - ANSWER
Cash accounting recognizes an event when a cash transaction occurs, while
accrual accounting recognizes an event when a cash obligation is created.
12.What is a transaction in financial accounting? - ANSWER An exchange of
goods or services from one individual or business to another.
13.What is a journal entry? - ANSWER A record of a transaction that is
posted to an account.
,14.What is the purpose of the income statement? - ANSWER To provide
information about a business's operations and economic profitability.
15.What are the three key elements of the income statement? - ANSWER
Revenues, Expenses, Profit.
16.What is net patient service revenue? - ANSWER The amount expected
to be collected from patient services after deducting the provision for bad
debts.
17.What does premium revenue represent? - ANSWER Revenues from
capitated patients as opposed to fee-for-service patients.
18.What is the significance of the provision for bad debts? - ANSWER It
accounts for the expected uncollectible amounts from patient service
revenue.
19.What is the role of the chart of accounts? - ANSWER To assign numeric
identifiers to individual accounts within a business.
20.What is the double entry system in accounting? - ANSWER A system
where each transaction is posted twice to ensure accuracy.
21.What is the primary means for disseminating financial statements? -
ANSWER The annual report.
, What does the income statement report over time? - ANSWER The results of
operations, typically over a year.
What is the formula for profit in the income statement? - ANSWER Profit =
Revenues − Expenses.
What is meant by 'full disclosure' in financial statements? - ANSWER Financial
statements must contain a complete picture of the economic events of the
organization.
What are T accounts? - ANSWER Accounts set up in a T format to handle
double entries in accounting.
What is the purpose of financial statements for managers? - ANSWER To
provide a consistent audited view of the organization's financial position.
What do expenses represent in the context of an income statement? - ANSWER
Expenses represent the resources used to create revenues; they are the costs
of doing business.
What are the two main classifications of expenses? - ANSWER Natural
classification (e.g., salaries, supplies) and functional classification (e.g., inpatient
services, outpatient services).
With Verified Multiple Choice and Conceptual
Actual 100% Correct Detailed Answers
Guaranteed Pass!!Current Update!!
1. What is financial accounting? - ANSWER Financial accounting involves
identifying, recording, and communicating the operational results and
status of an organization.
2. What are the four most important financial statements? - ANSWER
Income statement, Statement of changes in equity, Balance sheet,
Statement of cash flows.
3. What drives the requirement for financial accounting information? -
ANSWER The need of outsiders to have reliable information regarding
the financial status of an organization.
4. What is GAAP? - ANSWER Generally Accepted Accounting Principles, a
set of guidelines for the preparation of financial accounting statements.
5. Which organization has the legal authority to regulate financial statements?
- ANSWER The Securities and Exchange Commission (SEC).
6. What are the four assumptions in the conceptual framework of GAAP? -
ANSWER Accounting entity, Going concern, Periodicity, Monetary unit.
,7. What does the going concern assumption imply? - ANSWER It assumes
that the entity will have an indefinite lifetime rather than be liquidated in
the near future.
8. What are the four principles of GAAP? - ANSWER Historical costs,
Revenue recognition, Expense matching, Full disclosure.
9. What does the revenue recognition principle state? - ANSWER
Revenues must be recognized in the period in which they are realizable and
earned.
10.What are the two constraints of GAAP? - ANSWER Materiality and Cost-
Benefit.
11.What is the difference between cash and accrual accounting? - ANSWER
Cash accounting recognizes an event when a cash transaction occurs, while
accrual accounting recognizes an event when a cash obligation is created.
12.What is a transaction in financial accounting? - ANSWER An exchange of
goods or services from one individual or business to another.
13.What is a journal entry? - ANSWER A record of a transaction that is
posted to an account.
,14.What is the purpose of the income statement? - ANSWER To provide
information about a business's operations and economic profitability.
15.What are the three key elements of the income statement? - ANSWER
Revenues, Expenses, Profit.
16.What is net patient service revenue? - ANSWER The amount expected
to be collected from patient services after deducting the provision for bad
debts.
17.What does premium revenue represent? - ANSWER Revenues from
capitated patients as opposed to fee-for-service patients.
18.What is the significance of the provision for bad debts? - ANSWER It
accounts for the expected uncollectible amounts from patient service
revenue.
19.What is the role of the chart of accounts? - ANSWER To assign numeric
identifiers to individual accounts within a business.
20.What is the double entry system in accounting? - ANSWER A system
where each transaction is posted twice to ensure accuracy.
21.What is the primary means for disseminating financial statements? -
ANSWER The annual report.
, What does the income statement report over time? - ANSWER The results of
operations, typically over a year.
What is the formula for profit in the income statement? - ANSWER Profit =
Revenues − Expenses.
What is meant by 'full disclosure' in financial statements? - ANSWER Financial
statements must contain a complete picture of the economic events of the
organization.
What are T accounts? - ANSWER Accounts set up in a T format to handle
double entries in accounting.
What is the purpose of financial statements for managers? - ANSWER To
provide a consistent audited view of the organization's financial position.
What do expenses represent in the context of an income statement? - ANSWER
Expenses represent the resources used to create revenues; they are the costs
of doing business.
What are the two main classifications of expenses? - ANSWER Natural
classification (e.g., salaries, supplies) and functional classification (e.g., inpatient
services, outpatient services).
