Multiple Choice Questions
Identify the best answer for each of the following:
1. Which of the following bodies play significant roles in establishing GAAP for government health care providers?
a. GASB
b. FASB
c. Hospital Accounting Standards Board
d. U.S. Government Accountability Office

2. Government hospitals are reported similar to
a. Enterprise activities.
b. Governmental funds.
c. Governmental not-for-profits.
d. Special revenue funds.

3. The primary differences between hospital accounting and business accounting include
a. Liability classifications.
b. The types of equity accounts used in reporting.
c. Depreciation of capital assets.
d. Use of the effective interest method.

4. A gift to a government hospital that is restricted by the donor to use for a specific program should be credited directly to
a. Restricted net position.
b. Deferred revenue.
c. Revenue.
d. Unrestricted net position.

5. Donated medicines that normally would be purchased by a government hospital should be recorded at fair market value and should be credited directly to
a. Other operating revenue.
b. Nonoperating gain.
c. Net position.
d. Unearned revenue or gain.

6. Although their use is optional, the types of restricted funds often used in hospital financial accounting include
a. Specific purpose funds.
b. Endowment funds.
c. Plant replacement and expansion funds.
d. All of the above.

7. Which of the following statements concerning the accounting and financial reporting practices for revenue in government hospitals is false?
a. Only the amount of patient service charges that one has a responsibility to pay is reported as revenues.
b. Patient service revenues are reported net of charity services and uncollectible accounts.
c. Contractual adjustments arising from agreements with third-party payers (e.g., Medicare and Medicaid) are not netted with patient service revenues.
d. Charity services are not reported as revenues or receivables in the financial statements.

8. Which of the following events would not potentially result in a gain that would be reported in a government hospital’s financial statements?
a. Third-party reimbursements that exceed initial expectations
b. Sales of capital assets
c. Gifts or donations
d. Sales of investment securities

9. Which of the following statements best describes the accounting and financial reporting for the donation of professional services?
a. The reporting of contributed services by a government hospital is optional.
b. Contributed services received by governmental hospitals should be reported as non-operating revenues if they are being recognized in the financial statements.
c. Items a and b accurately reflect the reporting practices of government hospitals.
d. Items a and b are all false statements.

10. Which of the following classifications of equity would not be reported on a governmental hospital’s statement of net position?
a. Net investment in capital assets
b. Temporarily restricted net position
c. Restricted net position
d. Unrestricted net position