Exam 1: Introduction to Health Care Accounting and Financial Management

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Health care managers should only be concerned about the organization's long-term financial health and prospects. Explain your choice.

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Question 1

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Distinguish between short-term and long-term liabilities. Provide an example of each.

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Short-term liabilities are resources we owe some outside organization or entity that we will pay within one year; long-term will be paid in more than one year. A short-term liability could be accounts payable, note payable, wages payable, taxes payable, for example. Examples of long-term liabilities include bonds payable and mortgages payable.

Give three reasons why health care organizations need to generate and accumulate operating profits. Explain why profits might be preferred to other sources of resources (such as borrowing).

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Health care organizations need to earn and accumulate profits to subsidize clients who may not be able to pay, to maintain an operating reserve to protect the organization from unexpected revenue or expense volatility, and to have resources available for potential investment and expansion opportunities. Borrowing may not always be available, or, when it is, may take too long to access.

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Health care managers should only be concerned about the organization's long-term financial health and prospects. Explain your choice.

Distinguish between short-term and long-term liabilities. Provide an example of each.

Give three reasons why health care organizations need to generate and accumulate operating profits. Explain why profits might be preferred to other sources of resources (such as borrowing).

Introduction to Electronic Spreadsheets

The Financial Environment of Health Care Organizations

Accounting Concepts

Introduction to the Key Financial Statements

Valuation of Assets and Equities

Recording Financial Information

Reporting Financial Information: a Closer Look at the Financial Statements

The Role of the Outside Auditor

Depreciation: Having Your Cake and Eating It Too

Inventory Costing: The Accountants World of Make-Believe

An Even Closer Look at Financial Statements

Notes to the Financial Statements: The Inside Story

Ratio Analysis: How Do We Compare to Other Health Care Organizations

Investment Analysis: What Should We Do Next

Working Capital Management and Banking Relationships

Capital Structure: Long-Term Debt and Equity Financing

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