Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Pharmacy Management (P1 Spring) > Financial Reports and Budgeting > Flashcards

Financial Reports and Budgeting Flashcards

(85 cards)

Start Studying
1
Q

_____ is the process of recording, reporting and analyzing financial transactions

A

Accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

_______ fiscal/financial events that are recorded.

A

Transactions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

________ a defined period of time over which transactions are recorded.

A

Accounting period

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Income is measured at the END of the “____ ___” which is normally ____ year(s) long

A 
"accounting period"
1 year (12 months)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

T/F? The accounting year is ALWAYS the “calendar year”(Jan-Dec) long

A

False

- it can be the calendar year or the FISCAL YEAR (more common)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

The measurement of goods sold or services rendered for which payment is received.

A

Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

The measurement of resources used up during a period of time in order to earn revenue.

A

Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

T/F?

The time in which you measure Revenue and Expense MUST BE THE SAME.

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Expenses- Resources that can be used up. (3)

A

-Inventory (cost of goods sold)
- personnel
-intangible expenses
(all must be recorded)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Drugs owned by a retail pharmacy are examples of what?

A

Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

When a pharmacy OWES another business money it is considered a what?

A

Liability (Creditors- loan money= Liability)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

_______ is the sum of monies that are owned outright.

A

Owners Equity

Assets minus Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Accounting Equation

A 
A-L= OE
A= L+OE (balance sheet will be listed this way)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

____ ____ is the Mathematical expression used to describe the relationship between assets, liabilities and owner’s equity.

A

The accounting equation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the 3 fundamental accounting activities

A

-obtain financing
-make investments
-conduct a profitable operation
(we can do this by using the accounting equation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Financing may be obtained from _____ and/or _____

A

owners (shareholders) and/or creditors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Who has a claim on the BUSINESS ASSETS and receives regular MONETARY distributions (dividends)

A

Owners/Shareholder (owners-invest money= shareholder)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

____ loan money and are considered a liability

A

Creditors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

______ have a claim on the business assets and requires a business to repay loan w/ interest over a specified period of time.

A

Creditors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

T/F?

Type of investment depends upon the type of business conducted.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Funds are typically invested into what 3 things?

A
  • Inventory (COGS)
  • Equipment (computers, Rx vials)
  • Personnel
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

T/F?

Assets are used/engaged to conduct business operations.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Operating activities include what 4 things?

A

Purchasing
Distribution
Clinical activities
Administration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

______ ______ a written report that summarizes the transactions of a company for an entire accounting period.

A

Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What are the 3 most common types of financial states?
- Income Statement - Balance Sheet - Statement of Cash Flow
26
Income statement is also knows as what? (2)
- a income and expenses statement | - profit and loss statement
27
What Provides information about monies coming into the business (income) and monies used to generate income (expenses)?
Income Statement
28
Revenue - Expenses = ?
Income
29
T/F? | Income after taxes= Net income= net profit= earnings= link between income statement and balance sheet
True
30
____ _____ Provides information about an organization’s assets, liabilities, and owner’s (shareholder) equity at any point in time.
Balance sheet
31
T/F? Balance sheets can ONLY be prepared at the end of the accounting period
False | -May be prepared at any point in time but is commonly prepared at the end of each fiscal year
32
Assets can be put into what 2 categories?
Current and Fixed
33
Current Assets
- CASH ON HAND or the promise of cash | - if we had to pay a bill today we are able to meet financial obligations
34
Fixed Assets
things that we own but could sell if we needed to in order to generate income.
35
Current Liabilities
expenses that are due within 30 days
36
Long-term Liabilities
financing of something over a long period of time. | i.e. loan for a house
37
T/F? | The balance sheets runs the LIFE of the business.
True
38
Cash flow provides what?
information about the flow of cash into and out of an organization (important to follow trends of cash flow)
39
What 3 categories does cash coming in or going out fall into?
- operating - investing - financing
40
How often should cash flow trends be looked at?
monthly | -on a planning basis
41
Financial ratios provides information about what 3 financial performances?
- Profitability - Liquidity - Turnover
42
T/F? | Ratios use data from balance sheets only.
False | - income statements and balance sheets
43
T/F? | Financial ratios are not compared to REFERENCE POINTS.
False - should be compared to a reference point - industry standards - historical trends
44
What type of Ratios Measure the overall success of DAILY OPERATIONS?
Profitability Ratios
45
What are the 3 most common PROFITABILITY RATIOS?
- Gross profit margin (GPM) - Net profit margin (NPM) - Return on investment (ROI)
46
Gross Profit Margin (GPM)- (3)
- Availability of money to pay expenses - Typical range: 10-40% - Affected by DRUG prices and 3RD PARTY reimbursement
47
Net profit margin (NPM) (2)
- Fraction of net profit generated for every dollar of sales | - Indicates how well operating expenses are managed
48
T/F? | Gross profit margin and drug prices and 3rd party reimbursements have an INVERSE relationship.
True
49
What Measures how well an organization can make a profit from owner’s/investors funds?
ROI- Return on investment (sweat equity)
50
What may be used to gauge manager’s performance?
Return on investment
51
What does liquidity Ratios measure?
an organization’s ability to meet SHORT-TERM financial obligations
52
T/F? | Two PROFITABLILITY ratios include Current ratio and Quick ratio.
- False | - LIQUIDITY Ratios
53
T/F? | QUICK ratio Takes into consideration ALL current assets (cash, accounts receivable, COGS)
FALSE | - CURRENT
54
Increased current ratio = a decrease in what?
↑ CR = ↓ risk in meeting financial obligations | May indicate organization is too conservative
55
Decreased current ratio = inability to ____ and can lead to _____
↓ CR = inability to pay current liabilities → bankruptcy | - indicates CASH FLOW issue.
56
What is the desired range for current ratio?
2-5
57
Quick ratio (5)
- Also known as the acid-test ratio - Quick assets are easily converted to cash - BEST INDICATOR of ability to pay financial obligations - Good current and bad quick ratio - --Too much money is tied up in inventory - Desired QR: >1
58
T/F? | Turn over ratios measure an organization’s efficiency in using its assets
True
59
Inventory turnover ratio measures ____? Increased ITOR indicates ____? Decreased ITOR indicates ____? Desired Range____?
Measures how quickly inventory is sold ↑ ITOR indicates inventory is bought and sold quickly ↓ ITOR indicates inventory is sitting on the shelf Desired range: 6-12 ITOR DAYS = 365 / ITOR
60
Accounts receivable ratio measures ____? Increased ARTOR indicates ____? Decreased ARTOR indicates ____?
Measures how quickly money owed is collected ↑ ARTOR indicates efficiency in collecting money owed, probable good cash flow, and the ability to meet financial obligations ↓ ARTOR indicates inefficiency in collecting money owed, probable poor cash flow, and the inability to meet financial obligations ARTOR DAYS = 365 / ARTOR
61
What is the best indicator of a business' ability to pay financial obligations?
Quick Ratio
62
Detailed plan specifying how resources will be acquired and used during a specified time
Budgets and Budgeting
63
Practice-specific financials can be _____and ____.
Community | Institution
64
Community or Institution: - Payment plan reports - Personnel expense reports
community
65
Community or Institution: - Expense reports related to cost of personnel - Budget reports (pharmacy vs. organization)
institution
66
5 steps for Budgets and Budgeting
- Planning - Communicating - Allocating resources - Controlling operations - Evaluating performance
67
Name the step- Budgets and Budgeting: - Quantify a plan of action - Requires members of an organization to anticipate or react to changes in the sector
Planning
68
Name the step- Budgets and Budgeting: - Effective managers are aware of plans made by other managers - Discuss financial and operational needs
Communicating
69
Name the step- Budgets and Budgeting: - Resources are limited (personnel and financial) - Budgeting for competing uses - -Patient safety (pharmacy) vs. patient care (nursing)
Allocating resources
70
Name the step- Budgets and Budgeting: - Useful benchmark to compare budget vs. actual - -May result in changes when faced with unexpected decline in sale or increase in expenses
Controlling operations
71
Name the step- Budgets and Budgeting: | Pay-for-performance incentives
Evaluating performance
72
T/F? | BUDGETING is a process known as budget padding.
False | -BUDGET BEHAVIOR
73
_____ is the difference between actual and projected values.
Budgetary Slack
74
What are 3 reasons for budget padding?
- Perceived superior performance - Way to plan for the “unexpected” - Achieve desired budget after resource-allocation
75
Budget Behavior: | Leadership is often incentivized to_____ _expenses and _____ costs.
underestimate; overestimate
76
When developing an budget you must estimate what 2 things?
expenses and revenue
77
Estimated expenses (4)
- Production - Merchandising - Patient Care - Cash
78
Estimated revenue (6)
- Organization’s past sales and trends - General economic and industry trends - Impact of political and legal events - Promotional activities - Expected actions of pharmacy and competitors - Market research studies
79
____ is the OVERALL financial plan or statements.
Pro forma
80
Pro forma is made up of (2)?
Income and expense sheet (income statement) | Balance sheet
81
The LARGEST EXPENSE of a pharmacy is ______
Inventory
82
Income Sheet reports
Revenue and Expenses
83
Balance Sheet reports
Assets Liabilities Owner's Equity
84
T/F The ARTOR rate and days are inversely proportional to each other
TRUE
85
Good Current Ratio and Bad Quick Ratio
We have too much money tied up in inventory

Pharmacy Management (P1 Spring) (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions