In respect to the financial treatment of supplies and equipment and the physical plant, please

explain the following:

Inventory

a$)$ The concept of inventory,

b$)$ The items of inventory and where the items are stored within the healthcare services

organization, the methods of inventory, and at least three examples of which methods apply to

different responsibility centers with the respective reasons for the practices.

c$)$ How inventory is represented on the balance sheet, operating statement and cash flow

schedule, and the meaning of those representations to the management of the healthcare

services organization.

$($See Chapter $2$ Harrington; Chapter $10$ Baker$)$

Depreciation

a$)$ The concept of depreciation

b$)$ The items subject to depreciation

c$)$ How depreciation is applied in the straight$-$line method and accelerated method

d$)$ How depreciation is represented on the Operational Statement $($Income Statement$),$ and

explain whether there is any connection with the Balance Sheet and the Cash Flow

Schedule.