Finance and Business Flashcards Preview

NAB EXAM > Finance and Business > Flashcards

Flashcards in Finance and Business Deck (88):
1

Percent Occupancy

average daily census / number of beds

2

costs per patient day =

costs in month / total patient days in month

3

FTEs x 1.4 =

number of line staff positions if you want to know how many nursing assistant positions,, for example, you can have 7 days/week

4

Notes to Financial Statements

are included to explain the accountant's interpretation or calculation of figures, or variation in the books due to a change in their organization, which may not be readily understood by those reviewing the financial statements

5

a credit in accounting refers to

the right side of the journal account

6

entity concept

a basic concept of accounting, under which the nursing facility is regarded as a whole, entirely separate from the affairs of the owners, managers, or other employees

7

the income statement

shows whether revenues were sufficient to cover expenses, whether the facility made or lost money during the time period

8

Average Daily Census (ADC) equals

total patient days / days in the month

9

appropriate rates for resident care services

must reflect their true full costs

10

role of the general journal

records transactions that do not properly fit into any of the other journals

11

liabilities

are the obligations of the facility

12

accelerated depreciation

this method attributes most of the depreciation expense to the first years of the asset's life, thus enabling the facility to write it off more quickly, thereby gaining a tax advantage through earlier tax recognition of the investment

13

accrual accounting approach

under the accrual system of accounting, revenues are recorded when they are earned and expenses when they are incurred, regardless of the time the cash transactions take place

14

perpetual inventory system

recommended to maintain a precise count of inventory on hand, that is, an accurate count of supplies used and those remaining in the storeroom

15

Cash Receipts Journal

records all cash received for services provided; e.g. sales refreshment machines

16

Billings Journal

lists all bills send for services rendered

17

Accounts Payable Journal (purchase journal)

records all purchases made that will be paid within the next few months

18

Cash Disbursements Journal

records all payments made for services and supplies used for resident care and for all other operations of the facility

19

Payroll Journal

summarizes all payroll checks distributed during the pay period

20

General Journal

a record of non-repetitive entries

21

the basic accounting equation

Assets = (Liabilities + Owner's Equity) + (Revenues - Expenses)

22

objective evidence concept

requires accounting records to be prepared with documentable records that are kept by the facility

23

the net operating margin

the proportion of revenues earned to the amount of expenses used to earn those revenues

24

to account for the effects of inflation or deflation on the price of inventory, the GAAP recognizes two types of inventory costing

last in, first out (LIFO); first in, first out (FIFO)

25

cash accounting approach

expenses are recorded when the cash is actually dispersed and revenues are counted when the money from, for example, resident services are received by the facility

26

accountant

uses the information compiled by the bookkeeper to generate reports on the financial standing of the facility. The bookkeepers and accountants record the financial transactions of the facility.

27

five main groups of the chart of accounts

assets, liabilities, capital, revenues, expenses, fund account

28

assets

things owned by the facility

29

liabilities

things owed by the facility; or it's obligations

30

capital

money invested in the facility; also known as the facility's net worth

31

revenues

earnings from operations or other sources

32

expenses

costs of salaries, supplies, etc. that have been used up; usually through the provision of services

33

fund account

any funds that have been established for restricted or unrestricted use

34

turnover rate in percent is =

(number of employees terminated X 100) / total number of full time employees

35

non-current assets

refers to assets that will not be liquidated within the year

36

Average Length of Stay

total patient days in the year / number of admissions in the year

37

depreciation

is an expense associated with the use of an asset, so depreciation is included as both an expense on the income statement and a contra asset (literally against an asset) on the balance sheet

38

quick ratio

Quick Ratio = (Cash + Accounts Receivable + Marketable Securities) / Current Liabilities

39

bookkeeper

primarily records the daily cash transactions of the facility, keeping track of all money going out or coming in

40

historic cost concept

another basic tenet of accounting and relates to the ongoing concern concept

41

hours per patient day =

number of hours worked / number of patients

42

straight line depreciation

Historical Cost / Useful Life = Annual Depreciation Expense

43

working capital available

Current Assets - Current Liabilities

44

categorization of fixed assets

land and improvements; buildings; fixed equipment; major moveable equipment; minor moveable equipment

45

current liabilities

are those obligations that must be met within the next 12 months; such as bills from suppliers of foodstuffs and medical or office supplies, and short term bank loans

46

the debt to equity ratio

a measure of the long-run liquidity of the facility or the ability of the facility to meet its long term debts

47

Medicare Part D

benefits the facility cash flow inasmuch as some drugs are covered for the first time under Medicare Part D which drugs were previously paid for out of the preset Medicare rate being paid to the facility

48

the journals

the first place that transactions are recorded; they are the books of original entry

49

cash handling procedures

all cash must be handled by at least two employees, both of whom are bonded

50

time period concept

also known as the accounting period, the time period is the interval covered by the financial reports, usually one year

51

capital accounts (or net worth)

are recorded below the liabilities. This section is also called Owner's Equity, Shareholder's Equity, Fund Balance, or Retained Earnings depending on the origin of the funds that make up this section

52

bookkeeping

a system of recording all revenues and expenses, and matching those revenues to expenses during the same time period

53

Statement of Changes in Financial Positions

also simply called the statement of changes, this financial report shows the major transactions that occurred over the period covered by the two balance sheets

54

salvage value

a capital asset may have some value at the end of its useful life

55

the chart of accounts

a list of every account in the facility

56

Debt / Equity =

Long term Debt / Total Equity

57

patient census report

drawn up by the bookkeeper (usually for the month) by compiling the information from the Patient Census Forms

58

ongoing concern concept

requires that the accounting reports for a facility be prepared in the same way from year to year, in order to compare accurately the reports between two or more different time periods

59

current assets

refers to those possessions of the facility that will be, or theoretically be, turned into cash within 12 months

60

the General Ledger is where

at the end of each month, when all adjusting entries have been made in the journal accounts, the financial information in all journals is posted (written or entered)

61

historical cost of the asset

the cost of acquiring the asset that is depreciated over several time periods

62

financial statements

are a summary of the nursing facility's financial well-being within a time period

63

working capital available

Current assets minus current liabilities equals the working capital available. This can also be considered the funds available to the facility.

64

gross pay

calculated by multiplying hours worked by the hourly rate

65

the average payment period ratio

Average payment period = 365 x Accounts Payable / Supplies Expense

66

useful life of the asset

the number of years the item can be expected to be used by the facility

67

depreciation

to account for this loss of value to capital assets in the accrual system of accounting, the cost of the asset is spread over the time period that it is used

68

vertical analysis

converts each item on the income statement, balance sheet, or other financial report to a percentage of some total item on the same document

69

FTE (full time equivalent) =

total number of hours worked or budgeted / 40 (an FTE is a position that works only 5 days/week)

70

the balance sheet

records the financial position of the nursing facility at one point in time

71

average collection period ratio

Average Collection Period = 365 x Acc. Red. / Net Operating Revenues

72

a debit in accounting refers to

the left side of the journal account

73

closing the books

because revenues and expenses must be measured for finite periods of time, these accounts must be brought to a sum of zero so that they can be recorded over again for a new time period. Bringing the expense and revenue accounts to zero defines closing the books

74

variable costs

those that fluctuate directly and proportionately with changes in volume

75

the cash budget

is prepared on the cash basis of accounting, although it is based on the revenues and expenses from the operating budget

76

revenue centers

units of the facility, usually departments, that generate revenue usually through resident care. Revenue centers in the nursing facility will normally be nursing, possible physical therapy, occupational therapy, pharmacy, laboratory, and medical support.

77

the capital budget

a summarization of all anticipated capital (items with a life of more than 12 months) expenditures in the budget year

78

indirect costs

those that cannot be directly associated with a revenue-producing center, yet support the functions of the resident care centers

79

pro forma financial statements

the preliminary financial statements based on budgeted amounts

80

participatory method of budgeting

requires input from staff members on several levels of the organization

81

fixed costs

do not relate to changes in volume; the cost of the DON's salary will not change with fluctuations in the number of residents

82

break even volume (in units) =

fixed cost / (rate - variable cost)
ex. fixed cost of $235 at rate of $75 with a variable cost of $13 would require a break even volume of 3.79 units

83

to calculate the variable cost per patient in the nursing department

(total costs - total fixed costs) / volume units = variable costs / units
ex. $1000 total cost with $600 fixed cost and 35 patients equals a vc per patient of $11.42

84

direct cards

those directly attributable to a revenue center or directly providing resident care

85

top-down approach to budgeting

the administrator (or corporate) alone prepares the annual budget with little or no guidance from department heads

86

five steps in the budgeting process

assessing the environment; programming; developing the operating budget; the cash budget; the capital budget

87

total variable costs

total variable costs (TVC) change with volume, variable costs per unit do not. If disposable syringes are $1 each, the cost per syringe per patient will be $1, whether 100 or 150 patients receive injections using syringes purchased at one cost in one batch.

88

semi-variable costs

do not fit neatly into either a variable or fixed category, as they vary disproportionately with volume