Chapter 46 Exam

Question 1

Define accounting

Answer 1

the term for systematic recording and reporting of financial transactions

Question 2

What types of accounting duties are performed by staff of the medical office?

Answer 2

• Keeping financial records

Question 3

What types of accounting duties are performed by independent companies outside of the medical office?

Answer 3

• Financial planning
• Taxes
• Detailed financial reports

Question 4

Define bookkeeping

Answer 4

The process of keeping detailed records of financial transactions

Question 5

Define accounts receivable (AR)

Answer 5

Money owed to the practice

Question 6

Define accounts payable (AP) and what types of things are paid for out of this

Answer 6

• Money the practice owes and bills they have to pay

Question 7

What are cash disbursements and which account keeps a record of these?

Answer 7

• Accounts Payable

- Record of payments made to cover expenses of the practice

Question 8

When is income calculated in the cash basis of accounting used by medical offices?

Answer 8

Enters income when the payment is received for the services

Question 9

What is a major disadvantage of single entry bookkeeping systems?

Answer 9

• There is no method for cross-checking

Question 10

Define liabilities

Answer 10

the amount owed by a business to creditors

Question 11

Define patient ledger

Answer 11

A cumulative record of charges and payments that is kept on each patient

Question 12

How often are charges and payments posted to patient accounts

Answer 12

daily

Question 13

Most office computer billing programs are based on what type of bookkeeping system?

Answer 13

• Pegboard or “write it once” system

Question 14

Define superbill

Answer 14

Form containing both diagnosis and procedure codes in addition to charges and payments

Question 15

Who is responsible for checking the boxes on a charge slip for services provided?

Answer 15

the physician

Question 16

Define fee schedule

Answer 16

List of charges for the various procedures a physician performs

Question 17

What types of codes appear on office itemized charge slips?

Answer 17

• Diagnosis and procedure codes

Question 18

How would you find the usual charge for a procedure?

Answer 18

by looking on the fee schedule or it would automatically be in the system

Question 19

Define debit

Answer 19

a posting that is added to an account balance

Question 20

Does a debit increase or decrease the amount a patient owes?

Answer 20

• Increases the amount a patient owes

Question 21

Define day sheet (daily journal)-

Answer 21

Keeps a running tally of the practice’s income for that day and is a record of daily transactions

Question 22

How are transactions recorded on the day sheet?

Answer 22

chronological order

Question 23

What is created at the same time if a manual day sheet is used?

Answer 23

Itemization slip for the bank deposit

Question 24

Define proof of posting and where will you see it? What is its function?

Answer 24

• Will see it with the pegboard system or write it once system
• A method to verify correct arithmetic of columns

Question 25

What does it mean to “close the day”?

Answer 25

- The day sheet is printed at the end of the day and the day is closed so that no additional accounts receivable charges or entries can be entered using that date

Question 26

Define the accrual method of accounting-

Answer 26

accounting method in which income is entered at the time of the sale or provision of service

Question 27

What is a money market account? How do they compare with checking accounts? Can you give examples of things that might be paid out of this type of account?

Answer 27

- Require high minimum balances and earn interest at the money market rate. Lets the owner draw a specified number of checks per month without a processing fee. Checks often have to be at least $500. - Ex: Quarterly, semiannual, and annual payments for malpractice insurance; licenses for physicians and other licensed professionals on staff; dues to the state/county/local medical association or chamber of commerce

Question 28

Define payee

Answer 28

the person to whom a check is made out to

Question 29

Define cashier’s check; Whom is the check drawn on? Why do we use a cashier’s check? Can you give examples of what it might be used for?

Answer 29

- Check drawn on the bank itself rather than on an individual account - Cashiers checks are considered more reliable than the check of an individual business - Ex: Office is purchasing a large piece of equipment and the seller won’t accept a business check

Question 30

Define ABA routing number; who assigns the number?

Answer 30

- unique number | - issued by the American Banking Association to identify the bank

Question 31

When preparing a bank deposit slip, what should be included from each check on the deposit itemization record?

Answer 31

- Check number and amount

Question 32

What does MICR stand for? What is included in this line?

Answer 32

- magnetic ink recognition system | - ABA routing number, the account number, and the check number

Question 33

What determines the legal amount of money to be drawn on a check?-

Answer 33

- The amount written in words

Question 34

Define Pegboard system for check writing, specifically when used to pay bills information about each check should be recorded simultaneously on what?

Answer 34

- Created when visit is recorded | - Bank deposit slip

Question 35

Can you tell me how to prepare a bank deposit slip? What do you include on it?

Answer 35

- Total cash being deposited written on cash line - Total of the checks on the check line - Itemized list of checks must be included - Numerator of fractional bank number should be entered in the boxes to the left

Question 36

How often should a bank deposit usually be made?

Answer 36

Sometimes daily, but often 2-3 times a week

Question 37

Define blank endorsement

Answer 37

signature of the party to whom the check was written. Can be cashed by anyone holding the check

Question 38

Define special endorsement

Answer 38

statement of the party to whom a check should be paid followed by the signature of the party to whom the check was written

Question 39

Define restrictive endorsement

Answer 39

Instructions of how the check can be paid out, followed by signature of the party to whom the check was written

Question 40

Which type of endorsement should be used for checks that are received by the medical facility?

Answer 40

Restrictive endorsement should be used

Question 41

What does it mean to reconcile a bank statement?

Answer 41

- Making sure that the balance in the checkbook and the balance on bank statement equal eachother after adjusting for checks that were written but not yet cleared through the bank and deposits recorded after the statement period ended

Question 42

List reasons why the bank statement may not agree with the office record for a checking account-

Answer 42

There may be outstanding checks There may be recent deposits There may be bank fees There may be interest

Question 43

What is a petty cash account and what types of things are paid from it?

Answer 43

The cash kept on hand to pay for small, miscellaneous items, such as tips for a delivery, postage due, reimbursement to a staff member for parking at a meeting, or box of girl scout cookies for the office break room