Prepaid health care plans that earn revenue from agreements to provide services record revenue when services are rendered True False QUESTION 40 Medicaid is a federally sponsored and managed health care program for retirees True False QUESTION 41 The services of Health Maintenance Organizations are prepaid and fixed True False QUESTION 42 The services of Preferred Provider Organizations are prepaid and fixed True False "In a not-for-profit health care organization, the cost of malpractice must be accrued if it is either probable that impairment has occurred or if the amount of loss can be reasonably estimated" True False QUESTION 36 Not-for-profit health care entities must provide information on the three categories of net asset donor restrictiveness True False QUESTION 37 The statement of activities must indicate net assets released from restriction and any transfers between funds True False QUESTION 38 "In the long run, the health of a hospital depends mainly on the demand for its services and the ability to meet that demand at a reasonable cost" True False "Unlike businesses, not-for-profit health care providers often serve patients who they know will be unable to pay any portion of the amounts billed" True False QUESTION 32 Health care organizations provide uncompensated patient care as a matter of policy but not law True False QUESTION 33 "Restricted funds of a not-for-profit nursing home are not available for current use; however, the income earned on the funds is available" True False QUESTION 34 Charity care provided by a health care organization would be recorded in a contra-revenue account True False "During the current year, St. Louise s Hospital (a not-for-profit entity) earned, based on its normal billing rate, $1 million in patient service revenues. Many of these patients belong to a health plan that has an established pay schedule. Based on the specific services rendered to members of the plan, the hospital estimates that $0.05 million will not be collectible from the plan or the patient. Some of the patients are hospital employees. These employees are given a 50 percent discount on the services rendered. Employee discounts for the current year total $0.01 million. Some of the patients are uninsured and the hospital estimates that, of the amount billed to the uninsured patients, $0.2 million will not be collectible (bad debts). The amount of net patient service revenues for St. Louise s Hospital for the current year is" $1 million $0.94 million $0.87 million $0.74 million QUESTION 51 "A consortium of physicians agrees to provide services to the employees of a large county government. The agreement calls for monthly payments from the county to the consortium in the amount of $200,000 per month. County employees are not billed for services rendered by the consortium. All county employees are required to use the consortium under their health care program (any services rendered to county employees by other physicians are not covered under the health plan). During the month the consortium performed services for county employees for which it would have billed $170,000. The consortium referred patients to other health care providers for services they could not perform. The consortium estimates that patients will be billed $10,000 for those services. The amount of revenue that should be recognized for the month by the consortium is" "$200,000""$190,000""$170,000""$160,000" "In 2016 St. Martin s Hospital received a $50,000 cash gift to be used to buy supplies and other items for the pediatric department of the hospital. In 2017, St. Martin s purchased puppets and other items to be used in explaining medical procedures to young children. The acquisition of the items causes a NET decrease in which class(es) of net assets?" Unrestricted net assets only Temporarily restricted net assets Both unrestricted and temporarily net assets Neither unrestricted nor temporarily restricted net assets QUESTION 48 An accountant has encountered a perplexing financial reporting issue related to the hospital for which she is preparing financial statements. The issue is not specifically addressed by FASB statements. To which of the following sources would the accountant probably look first for industryspecific guidance? GASB Statements "AlCPA accounting and auditing guide, Not-for-Profit Organizations" "AlCPA accounting and auditing guide, Health Care Organizations" Pronouncements of the HFMA or AHA QUESTION 49 "In prior years, a not-for-profit hospital received funds from a donor who restricted the use of those funds to providing nursing scholarships. During the current year $8,000 of scholarships were awarded. These scholarships should be reported" As expenses in the unrestricted fund As reductions in the revenue section in the unrestricted fund As expenses in the temporarily restricted fund As expenses in the permanently restricted fund "Capitation fees paid by HMOs to hospitals, physicians, and other medical groups generally are based on the number of persons covered and expected costs to be incurred rather than on actual services provided" True False QUESTION 44 Not-for-profit hospitals are accounted for similarly to businesses but must adhere to the FASB s standards for not-for-profit entities True False QUESTION 45 "For a not-for-profit hospital, which of the following financial statements is NOT required?" Statement of financial position Statement of activities Statement of cash flows Statement of functional expenses QUESTION 46 "Intermountain Hospital, a not-for-profit health care provider, issued $70 million in term bonds to finance construction of a new wing at its main hospital. Terms of the bond issue require that $5 million of the proceeds of the bond issue be invested in U.S. government securities. The $5 million must be held until maturity of the bonds. The $5 million will increase which class of net assets?" Unrestricted net assets Temporarily restricted net assets Permanently restricted net assets Either (b) or (c)