10 Questions
What is the main focus of Government Accounting?
Accounting for procedures peculiar to specific types of NPOs
Which of the following does a Health Care Organization primarily deliver?
Health care services
What are the components of a complete set of financial statements for NPOs?
Statement of Financial Position, Statement of Operations, Statement of Cash Flows, Notes to the financial statements
What does 'Net patient revenue' represent in a Health Care Organization's financial statements?
Gross patient revenue less contractual adjustments, employee discounts, and billed charity care
Where should the presentation of contributions be in the financial statements of NPOs?
Statement of Operations
What is the difference between the hospital's fair price for a service and the agreed-upon amount with the insurance company called?
Contractual Adjustments
How are employee discounts accounted for in the hospital's financial records?
Accounted for as direct reduction to patient service revenue
What type of agreement is based on the number of employees instead of services rendered?
Capitation Agreements
Where are revenues from capitation agreements required to be shown on the statement of operations?
As a line item below net patient revenue
How is charity care recognized in the hospital's financial records?
Disclosed only in the notes
Study Notes
Government Accounting
- Focuses on the accountability and transparency of government entities in their financial reporting and management
Health Care Organization
- Primarily delivers medical services to patients
Financial Statements for NPOs
- A complete set of financial statements for Non-Profit Organizations (NPOs) consists of:
- Balance sheet
- Statement of operations
- Statement of cash flows
- Statement of changes in net assets
Net Patient Revenue
- Represents the revenue generated from patient services, net of contractual allowances and discounts
Presentation of Contributions in NPOs' Financial Statements
- Contributions should be presented as a separate line item on the statement of operations or in a separate statement of changes in net assets
Hospital's Fair Price and Agreed-Upon Amount with Insurance Company
- The difference between the hospital's fair price for a service and the agreed-upon amount with the insurance company is called a contractual allowance
Employee Discounts in Hospital's Financial Records
- Employee discounts are accounted for as a reduction in revenue, rather than as an expense
Capitation Agreements
- A type of agreement based on the number of employees (or covered lives) rather than services rendered
Revenue from Capitation Agreements
- Required to be shown on the statement of operations as a separate revenue category
Charity Care in Hospital's Financial Records
- Recognized as a reduction in revenue, rather than as an expense, in the hospital's financial records
Test your knowledge of accounting procedures peculiar to specific types of non-profit health care organizations, including hospitals, clinics, medical group practices, emergency care facilities, and more.
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