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Unformatted text preview: CHAPTER 17: ACCOUNTING FOR HEALTH CARE ORGANIZATIONS OUTLINE Number Topic Type/Task Status (re: 12/e) Questions: 17-1 Fund accounting Explain Revised 17-2 Financial statements List Revised 17-3 Capital assets Compare New 17-4 Deductions from revenue Explain Revised 17-5 Investments Compare Same 17-6 Restricted gifts Describe Revised 17-7 Assets limited as to use Explain New 17-8 Contingent liabilities Describe Same 17-9 Diagnosis-related groups Explain Same 17-10 Auditing issues List Cases: 17-1 Charity care Evaluate Same 17-2 Purchase of a health care organization Evaluate Same 17-3 Medicare and Medicaid Internet New 17-4 Health care reform Internet New Exercises/Problems: 17-1 Various Multiple Choice Revised 17-2 Not-for-profit hospital Journal Entries, F. S. Revised 17-3 Restricted contributions Journal Entries Same 17-4 Third party payors Calculate Revised 17-5 Not-for-profit facility Financial statements Revised 17-6 Public hospital Enterprise Fund Journal Entries Revised 17-7 Governmental hospital Analysis Revised 17-8 Not-for-profit hospital Analysis Same 17-1 CHAPTER 17: ACCOUNTING FOR HEALTH CARE ORGANIZATIONS Answers to Questions 17-1. For-profit, not-for-profit and public health care organizations may choose to use fund accounting for internal reporting purposes. The use of fund accounting allows organizations to separately account for revenues and expenses for which there may be donor or legal/regulatory restrictions. Additionally, public health care organizations that operate as governmental entities (not as stand-alone business-type entities) would use fund accounting for external reporting purposes. 17-2. SFAS No. 117 requires health care providers to issue a statement of financial position, statement of operations, and a statement of cash flows, as well as notes to the financial statements. Additionally, information concerning changes in equity is to be included in the statement of activities or in a separate statement of changes in equity. Considerable discretion is allowed in presenting financial information. Governmental health care organizations that engage in business-type activities provide a statement of net assets (balance sheet); statement of revenues, expenses, and changes in net assets; a statement of cash flows; and notes to the financial statements. 17-3. Performance indicators relate to the results of operations. An example of a performance indicator is the excess of revenues and gains over expenses and losses. Items that would be omitted from the performance indicator include: extraordinary items, discontinued operations, cumulative effect of an accounting change, unrealized gains/losses, distributions/receipts from owners, and restricted contributions. The performance indicator given, excess of revenues and gains over expenses and losses, is most comparable to income after taxes (but before discontinued items) in a for-profit organization....
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