RCA Exam

Question 1

Who is the Chief Financial Officer of the Residential Care Facility?

Answer 1

The Administrator

Question 2

What are “the Books”?

Answer 2

1) set of records that list each monetary (all money earned or spent) of the facility
2) used to prepare the financial statements

Question 3

Financial Statements

Answer 3

1) summary of all the transactions recorded in “the books”.

2) reflect the soundness of, the facility’s finanancial well-being within a time frame

Question 4

GAAP

Answer 4

Generally Accepted Accounting Principles

1) consistent standards of accouting that allow the finacial records to be understood by various parties
2) They permit the financial statements of various homes to be easily compared

Question 5

Comparability

Answer 5

financial statements of various homes to be more easily compared

Question 6

Full Disclosure

Answer 6

all financial information (all money spent, earned, invested, or owed) must be shown in the financial records to represent it’s financial standing

Question 7

Source Documents

Answer 7

peices of paper that are evidence of transactions, such as; receipts, bills, bank statements, etc

Question 8

Cash Accounting

Answer 8

expenses are recorded WHEN THE CASH is actually disbursed and revenues are recorded WHEN THE MONEY is received

Question 9

Accural Accounting

Answer 9

revenues are recorded WHEN THEY ARE EARNED and expenses WHEN THEY ARE INCURRED, regardless of the time the cash transactions take place

the revenue is recognized when the services are provided, rather than when received

used by Medicare and health care facilites

Question 10

assets

Answer 10

things OWNED by the facility

Question 11

liabilities

Answer 11

things OWED by the facility, or it’s obligations

Question 12

capital

Answer 12

money invested in the facility
aka; facility’s net worth
aka; facility’s equity

Question 13

Cash Flow Statement

Answer 13

contains CASH FLOWS from operating, investign, and financing activities

acts as a “corporate checkbook”

Question 14

Net Worth

Answer 14

assets minus liabilities

assets - liabilities = net worth

Question 15

Revenues

Answer 15

earnings from operations or other sources

Question 16

Expenses

Answer 16

cost of salaries, supplies, and so on, that have been used up

Question 17

Journal

Answer 17

the first place transactions are recorded, the books of entry (cash receipts, bilings, accounts payable, payroll, etc)

Question 18

Double-entry Book-keeping

Answer 18

for each transaction, TWO entires are made in the journal, a debit and a credit

when all debits and credits are totaled at the end of the month, they should equal

Question 19

Trail Balance

Answer 19

indicates whether or not an error has been made in recording the transactions

Question 20

General Ledger

Answer 20

a summary of all debits and credits contained in the journals for the time period

at the end of the month, when all enries have been made in the journal accounts, the financial information is posted to the ledger

has a page for each account in the Chart of Accounts

Question 21

Chart of Accounts

Answer 21

a list of names and numbers of all the accounts used in the business

normally are accounts for subcategories
ex; assets, liabilities, owner’s equity, revenues, expenses, etc)

Question 22

Income Statement

Answer 22

shows whether REVENUES were sufficient to COVER EXPENSES

shows wheter the facility made or lost money during the time period

is a measure of financial flows OVER TIME

Question 23

Balance Sheet

Answer 23

report that summarizes a firm’s assets, liabilities, and owner’s equity at a specific date/proint in time

financial snapshot, picuture of the finances right then/right now

Question 24

The Income Statement and Balance Sheet are prepared directly from the…

Answer 24

General Ledger

Question 25

Break-Even Point

Answer 25

the point of which total REVENUES for a firm or a program are EQUAL to the total EXPENSES incurred

Question 26

EBITDAR

Answer 26

Earnings Before Interest, Taxes, Depreciation, and Rent

shows cash flow available to pay interest, rent, and taxes after paying operational costs

used by potential lenders to determine credit-worthiness of an entity

Question 27

Current Assets

Answer 27

Possessions of the facility that will be or can be turned into cash within 12 months.

Question 28

Depreciation

Answer 28

an expense associated with the use of an asset

Question 29

Useful Life

Answer 29

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

Question 30

How to Determine the Annual Depreciation Expense

Answer 30

historical cost divided by useful life

Question 31

Straight Line Depreciation

Answer 31

historical cost of an asset is spread evenly over its useful life so that the depreciation expense is the same in every time period that it functions

cost of equipment minus (-) the salvage value equals (=) __X____. X divided by the number of years divided by 12 months equals (=) the straight line depreciation

Question 32

Working Capital

Answer 32

Working Capital = current assets minus (-) current liabilities

Question 33

Current Ratio

Answer 33

Current Ratio = current assessts divided by current liabilities

Question 34

Hours per Patient Day

Answer 34

hours per patient day =

number of hours worked divided by number of patients/residents

Question 35

Cost per Patient Day

Answer 35

cost per patient day =

costs in month divided total patient days in the month divided by the average number of patients during the month

Question 36

Cost per Day

Answer 36

Number of residents by (x) the number of days in the month by (x) the cost of raw food per day

Question 37

Variable Costs

Answer 37

costs that FLUCTUATE, CHANGE due to changes in volume

ex; food, nursing supplies, etc

Question 38

Fixed Costs

Answer 38

costs that DO NOT CHANGE due to changes in volume

ex; rent, administrator’s salary, etc

Question 39

Direct Costs

Answer 39

DIRECTLY attributable to a revenue center of DIRECTLY providing resident care
(ex; nursing salaries, benefits, payroll taxes, etc)

Question 40

Indirect Costs

Answer 40

CANNOT BE DIRECTLY associated yet support the functions of the resident care centers
(ex; for the nursing department - payroll, utilitiy, housekeeping, dietary, laundry, etc)

Question 41

Assets = Liabilities + Capital

Answer 41

“the accounting equation”

assets of a firm are equal to the claims of the creditors plus the claims of the owners

the balance sheet is a detailed statement of this equation

Question 42

LIFO

Answer 42

Used for inventory control-

Last In, First Out

Inventory added last is used first

ex; cleaning products

Question 43

FIFO

Answer 43

Used for inventory control-

First In, First Out

The older inventory is used first

ex; food