Session 8 Quiz Flashcards
(19 cards)
What three financial responsibilities are typically outsourced in most practices?
a. Primary tax preparation and advice
b. Valuation of the practice
c. Large financial issues
Are wages for doctors who are paid non a salary basis considered a fixed or variable expense?
Fixed
Define Cost of Goods Sold
The products used to produce a service for the client, or products sold to clients.
Offer five examples of products that would be included in COGS
Preventatives, tests, drugs, white goods, services
This type of accounting recognizes revenue when it its earned and expenses when they are incurred. When goods are received and services are performed. Is this Cash-based or Accrual based?
Accrual
Which type of accounting is typically considered more accurate?
Accrual
What is another name for the Profit and Loss Statement?
The Income Statement
When comparing expenses on the Profit and Loss Statement it is important to express expenses in dollar amounts but also as ______
a % of gross
The basic accounting equation is Assets = ______ + ________
Liability + Owner Equity
Regarding payroll deductions; what does FICA stand for, what does it fund, and is it paid by the employer, employee, or both?
Federal Insurance Contribution Act - a tax paid by both the employer and the employee to fund Social Security and Medicare.
At the end of the year, any independent contractor who received more than ______ in wages from the practice must be used a 1099 form.
$600
If the contractor fails to file and pay their taxes, and the practice did not issue a form 1099 at the end of the year, what risk is the practice subject to?
The practice can be held responsible for pay all back taxes, interest, and penalties.
If the practice is found to be spending more than it is generating, what steps can be taken to gain control?
a. Decrease spending and increase revenue.
b. Hold employees accountable for waste.
c. Consider reevaluating your fee structure.
d. Review charges to be sure they are being captured correctly and not missed.
e. If a line of credit is necessary to keep the practice viable in the short term, have a plan to pay back the loan as soon as possible.
AR should be no higher than _______% of gross revenue?
1.5%
When a non-sufficient funds check has been written to the practice, the practice has three choices of action, what are they?
1) Accept the financial loss
2) Attempt to collect
3) Use a third party collection agency
Which act regulates collection procedures of past due accounts?
Fair Debt Collection Practices Act
Accounts receivable turnover - how many times the accounts receivable balance is converted into cash. What is the formula for AR turnover?
Credit Sales/Average AR = AR Turnover
Regarding the value of the AR turnover; is it better to have a higher or lower number?
A higher value fore the AR turnover ratio is better because it indicates the AR balance is turned into cash more often.
How can you calculate the average of the AR entries?
Beginning AR + Ending AR / 2 = Average AR
