Part 1: Statement of Operations and Financial Statements
Statement of Operations and Financial Statements
1. List several efforts that have been enacted by payors to control costs.
Explain the ramifications of allowing/disallowing an individual to be able to sue his or her HMO.
2. What are each of the financial statements commonly called in for-profit health care organizations and in not for-profit care organizations?
The following questions relate to the statement of operations of not for-profit health care organizations.
1. What is the analogous for-profit statement called? What are the main sections of the statement of operations?
2. What are revenues gains and other support?
3. What are expenses and losses?
4. Funds released from restricted net assets to unrestricted net assets are presented in what section of the statement of revenue expenses and other activities?
The following questions relate to the statement of changes in net assets.
1. What is the traditional name for this statement?
2. What is the purpose of this statement?
3. What are the main sections of this statement?
4. Discuss the difference between permanently restricted and temporarily restricted net assets.
The following questions relate to the statement of cash flows of a not-profit health care organization.
1. What are its main sections?
2. What is the purpose of this statement?
3. Where in the financial statements would there be important explanatory information?
4. In what financial statement would one identify the purchase of long-term investments?
5. How does the accrual basis of accounting differ from the cash basis of accounting?
Part 2: Accrual vs. Cash Basis Accounting & Balance Sheet
Accrual vs. Cash Base Accounting
1. Explain the difference between the accrual basis of accounting and the cash basis of accounting. What are the major reasons for using accrual accounting?
2. What are the purpose of a journal and a ledger?
Give an example of a contra-asset and explain how it is recorded on the ledger as a transaction.
3. Explain what a prepaid expense is and how it is recorded on the ledger as a transaction.
4. What are the major differences in recording transactions for a for-profit organization versus a not-for-profit or are there any?
5. List and record each transaction for S. Zee Outpatient Clinic under the accrual basis of accounting at December 31 20X1. then develop a balance sheet as of December 31 20X1 and a statement of
operations for the year ended December 31 20X1.
The clinic received a $3000000 of unrestricted cash contribution from the community. (this transaction increases the unrestricted net assets account.)
The clinic purchased $2000000 of equipment. The clinic paid cash for the equipment.
The clinic borrowed $1000000 from the bank a long-term basis
The clinic purchased $1500000 of supplies on credit.
The clinic provided $5500000 services on credit.
In the provision of these services the clinic used $1000000 of supplies.
The clinic received $500000 in advance to care for capacitated patients.
The clinic incurred $2000000 in labor expenses and paid cash for them.
The clinic incurred $1500000 in general expenses and paid cash for them.
The clinic received $4500000 form patients and their third parties in payment of outstanding accounts.
The clinic met $300000 of its obligation to capacitated patients in Transaction g.
The clinic made a $100000 cash payment on the long-term loan.
The clinic also made a cash interest payment of $50000.
A donor made a temporarily restricted donation of $100000 to be used for operations.
The clinic recognized $200000 in depreciation for the year.
The clinic recognized $500000 of patient accounts would not be received.
6. How do capital structure rations and liquidity rations differ in providing insight into an organizations ability to pay debt obligations?
7. Identify and explain two situations where an organization might have increasing activity rations but declining profitability.
Part 3: The Working Capital Cycle and the Cost of Credit
Maximizing Revenue and Expenditures
Explain how the four kinds of float (billing collections transit and disbursement) can be used to maximize the efficiency of incoming revenues and outgoing expenditures? What kinds of policies
can be initiated to facilitate maximum efficiency and why?
The Working Capital Cycle and the Cost of Credit
1. In terms of cash flow what are the stages of the working capital cycle?
2. Describe the two components of a working capital management strategy.
3. What are the two types of unsecured bank loans? Describe each.
4. In the hospitals billing process why is medical records a critical department?
5. Identify the alternatives for investing cash on a short-term basis and discuss the general characteristics of each.
6. List three ways to measure accounts receivable performance.
7. Identify and define two methods to finance accounts receivable.
8. Compute the annual approximate interest cost of not taking a discount using the following scenarios. What conclusion can be drawn from the calculations?