18 Oct The statement of financial position of a not-for-profit health care organization should distinguish among unrestricted, temporarily restricted, and permanently restricted net assets.

The statement of financial position of a not-for-profit health care organization should distinguish among unrestricted, temporarily restricted, and permanently restricted net assets.

 

Question 2Unlike businesses, not-for-profit health care providers often serve patients who they know will be unable to pay any portion of the amounts billed.

 

Question 3Private not-for-profit colleges and universities are subject to the same FASB standards as other not-for-profit entities.

 

 Question 4Restricted funds of a not-for-profit nursing home are not available for current use; however, the income earned on the funds is available.

 

 Question 5Charity care provided by a health care organization would be recorded in a contra- revenue account.

 

Question 6In 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.

 

Question 7In a public university setting, general administration and sponsored research are examples of revenues classified by source.

 

Question 8Long lived assets held by public universities are carried at cost, or fair value if donated.

 

Question 9Investments of a public college must be reported at fair value.

 

Question 10Prepaid health care plans that earn revenue from agreements to provide service record revenue when services are rendered.

 

 Question 11Tuition revenue should be reported net of tuition discounts and scholarships.

 

 Question 12In accounting for colleges and universities, related entities should either be disclosed in the Notes to the Financial Statements or reported as component entities, depending on the degree of control and economic interest.

 

Question 13Under GASB 39, colleges and universities are required to bring their affiliated medical organizations into their financial reports.

 

 Question 14Financial statements for Smith College, a church-supported college, should be prepared according to standards set by

 

 Question 15For a not-for-profit hospital, which of the following financial statements is NOT required?

 

 Question 16For a not-for-profit college or university, which of the following categories of net assets is NOT appropriate in its external financial statements?

 

Question 17 Katerah College, a private college, received a $1 million donation. The donor specified that the principal of her gift could never be used for program activities but the earnings on the principal must be used to provide scholarships to academically qualified students in the business school. The $1 million gift would increase which of the following categories of net assets?

 

Question 18Intermountain 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?

 

 Question 19During the current year, Kayla University received a $50,000 gift from an alumna who specified that it must be used to pay travel costs for faculty to attend health care conferences in foreign countries. During the year the university spent $8,000 to support travel to a health care conference in Italy. The $8,000 disbursement will cause a NET decrease in which class of net assets?

 

 Question 20In 2006 St. Joe 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 2007, St. Joe 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?

 

Question 21Voluntary health and welfare organizations must also report expenses by

 

 Question 22Sheridan Public School Foundation had available temporarily restricted gifts in excess of $200,000. The Foundation decided to invest this money temporarily until it needs the funds for the restricted purpose. The donors had made no specific stipulations regarding investment earnings but the Foundation board had voted to use the earnings on the projects for which the gift had originally been restricted. At year-end, the securities had a fair value of $200,500. The appropriate way to recognize the change in fair value is

 

Question 23An 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 industry-specific guidance?

 

 Question 24In 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

 

Question 25During the current year, St. Mary 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 $.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% discount on the services rendered.

 

Employee discounts for the current year total $.01 million. Some of the patients are uninsured and the hospital estimates that, of the amount billed to the uninsured patients, $.2 million will not be collectible (bad debts). The amount of net patient service revenues for St. Mary s Hospital for the current year is

 

Question 26A 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 $100,000 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 $85,000. The consortium referred patients to other health care providers for services they could not perform. The consortium estimates that patients will be billed $5,000 for those services. The amount of revenue that should be recognized for the month by the consortium is

 

Question 27A hospital estimates that, based on past experience, it will incur $5 million in malpractice claims as a result of services rendered in the current period. The hospital carries a malpractice insurance policy with a yearly $2 million deductible clause. The amount that should appear on its year-end financial statement as Claims Expense (Loss) should be

 

Question 28A hospital carried a 2-year malpractice insurance policy that allows for retroactive premium adjustments based on experience (claims actually incurred). The basic premium is $150,000, payable in advance. At the end of the first year the hospital estimates that it will have to pay an additional $40,000 in premiums as a result of claims filed in the current year and it estimates that it will incur additional premiums in the second year of $50,000 as a result of claims filed in the second year. The amount of insurance expense that should appear on the financial statements at the end of the first year should be

 

 Question 29An accountant has encountered a perplexing financial reporting issue related to the private college for which he is preparing financial statements. The issue is not specifically addressed by FASB Statements. To what standards would the accountant first look for guidance?

 

Question 30Sponsors of not-for-profit health care organizations generally include:

 

 Question 31A specialized health care facility normally purchases their medicine. However, this month a wealthy philanthropist donates the medicine. This medicine should be recorded at fair market value and should be credited directly to:

 

Question 32The Gulf Coast bank is holding $750,000 donation in an independent permanent trust with the investment income dedicated for use by the Coastal hospital for operating purposes. The $750,000 principal should be:

 

 Question 33Which of the following would normally be considered ongoing or central transactions for a not-for-profit hospital?

 

 Question 34The community hospital of Briarwood normally includes proceeds from sales of meals in their cafeteria as

 

Question 35In accounting for health care organizations, restricted net assets are:

 

Question 36In the process of general purpose external financial reporting, a health care organization is required to present

 

 Question 37The current rates of General Hospital provide that revenues should have been $5 million for the current year; however, only $3.8 million was actually collected due to allowances for charity care of $700,000 and discounts of $500,000 to third-party payors. What amount should General Hospital report as net health care services revenues in the statement of operations for the current year?

 

Question 38Although it no longer applies to external financial reporting, AICPA 1973 Audit and Accounting Guide for Colleges and Universities provides which of the following in the fund structure