Exercise $14-1$ True or False

Read each statement, and determine whether the statement is true or false. Record the answer in the blank provided. T $=$ true; F $=$ false.

$\_\_\_\_\_\_\_1.$ A change fund is used to pay for small expenditures such as supplies used in the office.

$\_\_\_\_\_\_\_2.$ It is best if several people are responsible for the petty cash fund; this reduces the chance that mistakes will be made in handling the fund.

$\_\_\_\_\_\_\_3.$ Reports generated from a computer billing system provide detail on the financial health of the practice.

$\_\_\_\_\_\_\_4.$ It is common for a medical administrative assistant to have the sole responsibility of managing the financial operations of a medical practice.

$\_\_\_\_\_\_\_5.$ A medical practice must be ready to accept cash, checks, or credit cards for payment of patients$$ account balances.

$\_\_\_\_\_\_\_6.$ Because medical charges are billed directly to insurance companies, a medical office has no need to have cash on hand.

$\_\_\_\_\_\_\_7.$ A receipt provides proof of payment on a patient$$s account.

$\_\_\_\_\_\_\_8.$ A restrictive endorsement limits where a check can be deposited.

$\_\_\_\_\_\_\_9.$ A negative balance on a patient$$s account is an amount that is owed to the practice.

$\_\_\_\_\_\_10.$ NSF and returned checks should be subtracted from a patient$$s account balance.

$\_\_\_\_\_\_11.$ All business records should be kept for a period of $5$ years.

$\_\_\_\_\_\_12.$ If a bank refuses to pay a check, this is known as a restrictive endorsement.

$\_\_\_\_\_\_13.$ Reconciling a checking account ensures that the check register agrees with the bank$$s balance on a checking account.

$\_\_\_\_\_\_14.$ Once a checking account has been reconciled and the check register agrees with the bank statement, the bank statement can be shredded.

$\_\_\_\_\_\_15.$ A credit balance on an account may be applied to future charges on an account.

$\_\_\_\_\_\_16.$ Patients who live outside the vicinity of a medical practice may be expected to pay their bill on the date of an office visit because it may be difficult to collect a bill if it goes unpaid at a later date.

Exercise $14-2$ Chapter Concepts

Read the following statements or questions, and choose the answer that best completes each statement or question. Record the answer in the blank provided.

$\_\_\_\_\_\_\_1.$ Identifies profit earned over a period of time.

$($a$)$ Transaction journal

$($b$)$ Check register

$($c$)$ Income statement

$($d$)$ Balance sheet

$\_\_\_\_\_\_\_2.$ Identifies the amounts of assets, liabilities, and owners$$ equity in a medical practice.

$($a$)$ Cash flow statement

$($b$)$ Balance sheet

$($c$)$ Check register

$($d$)$ Accounts payable

$\_\_\_\_\_\_\_3.$ Which of the following is false about a petty cash account?

$($a$)$ Petty cash is used to purchase small items for use in a medical office.

$($b$)$ Receipts should be kept for petty cash expenditures.

$($c$)$ A petty cash fund is different from a change fund.

$($d$)$ Petty cash is normally used to cover expenditures of more than $$100.$

$\_\_\_\_\_\_\_4.$ All of the following are true about writing checks except:

$($a$)$ Some practices may use computer$-$generated checks.

$($b$)$ Checks should be used in numerical order.

$($c$)$ When the amount is entered on a check, care should be taken to eliminate the possibility that the amount may be altered.

$($d$)$ Mistakes on a check can be crossed out with a single line and corrected with red ink.

$\_\_\_\_\_\_\_5.$ All of the following can be found on a purchase order except:

$($a$)$ Name of vendor

$($b$)$ Listing of items purchased

$($c$)$ Balance of the account to which the purchase will be charged

$($d$)$ Name of person authorizing the purchase

$\_\_\_\_\_\_\_6.$ Accounts payable is an example of

$($a$)$ An asset

$($b$)$ A liability

$($c$)$ Owners$$ equity

$\_\_\_\_\_\_\_7.$ Cash is an example of

$($a$)$ An asset

$($b$)$ A liability

$($c$)$ Owners$$ equity

$\_\_\_\_\_\_\_8.$ Deposits to a practice$$s bank account should be made

$($a$)$ When there is time

$($b$)$ Weekly

$($c$)$ Daily

$($d$)$ After each check is received

$\_\_\_\_\_\_\_9.$ Which of the following is not included on a receipt?

$($a$)$ Date of the patient$$s visit

$($b$)$ Name of the person who made the payment

$($c$)$ Method of payment

$($d$)$ Name of person who received the payment

$\_\_\_\_\_\_\_10.$ All of the following are true about bookkeeping and accounting in a medical office except:

$($a$)$ An assistant can expect to play a supporting role in the financial management of a practice.

$($b$)$ Computer systems can provide, in a matter of seconds, important financial data needed for planning.

$($c$)$ An assistant should expect to be responsible for analyzing financial reports to plan for future expansion of a practice.

$($d$)$ Office documents should be retained until applicable statutes of limitations have expired.