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Q:
the purpose of the organization is explained by the: a. mission statement b. vision statement c. organizational values statement
Q:
the philosophy of the organization is explained by the: a. mission statement b. vision statement c. organizational values statement
Q:
the hilltop home health agency is part of the not-for-profit mountainview retirement community complex. hilltop is reviewing and updating its old mission statement. should we expect the overall content of this organizations mission statement to be: a. broadly charitable in nature b. generally proprietary in nature c. lengthy d. containing advertising phrases about the retirement community e. a, & c f. b & d g. b, c & d
Q:
the eastern home health agency is owned by betty and fred jones. the joneses are composing a mission statement to be placed on easterns web site. should we expect the overall content of this organizations mission statement to be: a. broadly charitable b. generally proprietary c. boastful d. containing advertising phrases about the agency e. a, & c f. b & d g. b, c & d
Q:
mission, vision and value statements can vary in how many of the aspects described below? a. organization b. length c. terminology d. emphasis e. a, b & c f. a, c & d g. b, c & d h. all of the above
Q:
which type of financial statement is often prepared to answer a what-if question? a. a projection b. a forecast c. either of the above d. neither of the above
Q:
how many of the following statements about financial projections are correct? projections: a. are different than forecasts b. are views into the future c. are retrospective d. a & b e. a & c f. b & c g. all of the above
Q:
how many of the following statements about financial projections are correct? projections: a. are based on assumptions that are expected to exist b. reflect actions that are expected to occur c. are based on different sets of hypothetical assumptions d. reflect actions that might occur, based on such hypothetical assumptions e. are considered to be prospective financial statements f. a & b g. a, b & e h. c & d i. c, d & e
Q:
how many of the following statements about financial forecasts are correct? forecasts: a. are based on assumptions that are expected to exist b. reflect actions that are expected to occur c. are based on different sets of hypothetical assumptions d. reflect actions that might occur, based on such hypothetical assumptions e. are considered to be prospective financial statements f. a & b g. a, b & e h. c & d i. c, d & e
Q:
how many of the following statements about financial projection assumptions are correct? a. compiling the projections comes before making certain key assumptions b. documenting assumptions adds validity to the final projected statements c. an overall process of information gathering underlies the assumptions themselves d. a & b e. a & c f. b & c g. all of the above
Q:
properly constructed financial projections should provide information that is: a. laid out in a logical format b. properly explained for a knowledgeable reader c. supported by key assumptions that are documented d. supported by a series of assumptions, documented or otherwise e. a & b f. a, b & c g. a, b & d
Q:
how many of the following questions are appropriate to ask before completing a swot analysis? a. who prepares the final report? b. who receives the final report? c. who is responsible for taking appropriate action after the analysis and its report are completed? d. a & b e. a & c f. b & c g. all of the above
Q:
how many of the following questions are appropriate to ask when commencing a situational analysis project? a. what type of task force or committee does the project need? b. who will be appointed to this task force? c. what types of data/information should be gathered for this project? d. who will gather the information that is needed? e. all of the above f. a, b & c g. b, c & d h. all of the above
Q:
how many of the following statements about situational analysis are correct? situational analysis: a. reviews the organizations internal operations b. explores the organizations external environment c. analyzes the organizations situation d. a & b e. a & c f. c & d g. all of the above
Q:
the swot analysis matrix contains four components, two of which are labeled internal while the remaining two are labeled external. which of the four components are labeled internal? a. strengths b. weaknesses c. opportunities d. threats e. a & b f. a & c g. c & d h. none of the above
Q:
mission, vision and value statements can recognize: a. a financial emphasis that is important to the organization b. the special status or focus of the organization c. legislation that restricts activities of the organization d. all of the above e. (a) and (c) only f. (a) and (b) only g. none of the above
Q:
the federal governments planning requirements are important because they provide: a. guidance through regulated concepts b. planning templates for non-governmental organizations use c. a framework for strategic planning d. all of the above e. (a) and (c) only f. (b) and (c) only g. none of the above
Q:
the manager of a hospital unit may contribute to a strategic planning project by: a. serving on a planning committee or task force b. gathering and/or analyzing data for the project c. writing the organizations mission statement d. suggesting criteria for performance measures e. all of the above f. (a), (b) and (d) only g. (b), (c) and (d) only h. none of the above
Q:
xyz healthcare's chief financial officer has calculated that xyz must pay state and federal income taxes this year at a rate of 25 percent. depreciation on equipment purchased for the radiology department will amount to $10,000 this year. income tax savings for the current year on this equipment will therefore amount to __________.
Q:
a contract-to-purchase transaction is also called a __________ lease.
Q:
the cost of an operating lease is considered to be an __________ expense.
Q:
a not-for-profit organization typically is not affected by tax savings because it is exempt from paying income taxes on its operations. however, this fact does not affect any line items in an owning-versus-leasing comparative analysis of net cash flow effects performed between a for-profit and a not-for-profit organization.
Q:
depreciation results in an income tax savings because the depreciation can be taken as an expense, and that expense reduces the organization's taxable income.
Q:
depreciation expense is a non-cash expense item on the statement of income.
Q:
purchasing equipment means assuming ownership of and/or taking title to the item.
Q:
when analyzing lease-versus-purchase decisions, it is usually assumed that the money to purchase equipment will be borrowed.
Q:
the golden age nursing facility enters into a lease contract for badly needed fancy new kitchen equipment. after the contract is signed, the cfo at the home office of the nursing facility chains ownership informs the golden age administrator that the present value of the kitchen equipment lease payments amounts to 70% of the assets value. does this lease have to be capitalized? a. yes b. no c. dont know
Q:
doctors green and brown enter into a lease contract for a roomful of new infusion equipment. the terms of their lease contract allow them to buy the equipment at the end of the five-year lease for one dollar. does this lease have to be capitalized? a. yes b. no c. dont know
Q:
metropolis health system enters into a lease contract for a new pharmacy robotic drug cart equipment system. the metropolis cfo determines that the useful life of the drug cart system is ten years. the lease contract will run for eight years. does this lease have to be capitalized? a. yes b. no c. dont know
Q:
the process of recording equipment acquired through a contract-to-purchase is called: a. acquiring the lease b. depreciating the lease c. capitalizing the lease d. none of the above
Q:
if a lease contract meets any of four particular criteria, then that lease must be capitalized. if, however, a lease contract does not meet any of the four criteria, then that lease is considered to be: a. an operating lease b. a financial lease c. not a lease at all d. none of the above
Q:
which type of lease must be capitalized? a. an operating lease b. a financial lease c. either of the above d. neither of the above
Q:
a lease-purchase agreement is actually a contract to purchase. a. correct b. not correct c. not applicable
Q:
cash reserves on the tri-state medical equipment corporations balance sheet presently amount to $111,200. when tri-state pays cash for twenty percent of the purchase price of the new delivery truck, the cash payment will: a. increase the companys cash reserves b. decrease cash on the balance sheet c. require an entry on the statement of retained earnings d. require an entry to the reserve for depreciation on the income statement
Q:
the tri-state medical equipment corporation purchases a large new delivery truck and finances eighty percent of the purchase. entering this transaction on the books of the company should properly involve recording: a. an asset on the balance sheet b. a liability on the cash flow statement c. both an asset and a liability on the balance sheet d. an entry to the reserve for depreciation on the income statement e. none of the above
Q:
in the case of purchasing equipment, the purchase could take place by a. financing all of the purchase b. paying cash for all of the purchase c. financing only part of the purchase d. all of the above e. none of the above
Q:
leasing is typically an alternative to other means of financing. a. correct b. not correct c. not applicable
Q:
based on the information about abc healthcare contained in the previous question, is abc: a. a for-profit company b. a not-for-profit company c. not applicable d. dont know
Q:
abc healthcare's controller has calculated that abc must pay state and federal income taxes this year at a rate of 20 percent. depreciation on equipment purchased for the emergency department will amount to $20,000 this year. income tax savings for the current year on this equipment will therefore amount to: a. $2,000 b. $4,000 c. $8,000 d. none of the above
Q:
the present value factors used in computing the overall present value net cost examples came from a table of such factors. the table shows years vertically and various percentages in horizontal columns, and is an appendix to the chapter about the time value of money. this chapter actually contains three appendices, each containing a different type of table. which one is the appropriate table for determining the present value factors used in our computations? a. present value table (present value of $1) b. present value of an annuity of $1 c. compound interest table (the future amount of $1) d. none of the above
Q:
the overall present value net cost is determined by adding all the present value answers to arrive at a net result (as shown in examples), including which of the following [hint: negative numbers are shown in brackets]: a. both positive and negative numbers b. only positive numbers c. either of the above d. neither of the above
Q:
when calculating the comparative present value cost of owning versus cost of leasing, the present value answers for each year are determined by: a. multiplying the present value factor times net cash flow b. multiplying net cash flow times the present value factor c. either of the above d. neither of the above
Q:
when calculating the comparative present value cost of owning versus cost of leasing, the computation necessarily includes present value factors. the present value factor for each year represents: a. the assumed cost of capital b. the actual cost of capital c. either of the above d. neither of the above
Q:
computing the tax savings from leasing expense is: a. always necessary b. sometimes necessary c. never necessary d. not applicable
Q:
when computing the cost of owning: a necessary step in calculating net cash flow may be: a. calculating the tax savings from depreciation expense b. calculating the tax savings from leasing expense c. both of the above d neither of the above
Q:
depreciation expense is a necessary assumption when calculating comparative cash flow for: a. a not-for-profit company b. a for-profit company c. both of the above d. not applicable
Q:
whether there will be salvage value is an important factor when: a. computing the cost of owning b. preparing a comparative cash flow statement c. computing the cost of leasing d. a & b e. a & c f. b & c
Q:
when computing the cost of owning: to commence calculating a comparative cash flow, first determine the equipment purchase price. a. correct b. not correct c. not applicable
Q:
in the near future there is a possibility that certain companies may be required to adopt international accounting standards, including standards regarding the treatment of leases. if so, the entities affected would include: a. all companies that issue financial statements used for external purposes b. u.s. publicly-held companies c. both of the above d. neither of the above
Q:
in the u.s., financial statements intended for external purposes must follow gaap, or generally accepted accounting principles. the treatment of equipment leases in financial statement used for external purposes: a. falls under gaap b. is not affected by gaap c. neither of the above
Q:
a second set of examples compares the cost of owning versus the cost of leasing for northside clinic, a for-profit organization. the net advantage to leasing (versus owning) for northside amounted to $1,489. why is northsides net result so different from southsides net result? a. because the not-for-profit company could recognize tax savings b. because the for-profit company was unable to recognize tax savings c. both of the above d. neither of the above
Q:
in the chapter about owning versus leasing, one set of examples compares the cost of owning versus the cost of leasing for southside clinic, a not-for-profit organization. the net advantage to owning (versus leasing) for southside amounted to $676. the difference between the two methods of financing: a. is so small that it might be disregarded b. may be considered as a nearly neutral comparison between the two methods c. both of the above d. neither of the above
Q:
an equipment lease that is not treated as a purchase because it does not meet all the purchase criteria is then treated as a rental. rental lease payments are recorded as: a. an asset b. an operating expense c. neither of the above
Q:
when purchasing equipment, the asset representing the equipment purchase is recorded on the organization's: a. statement of income b. balance sheet c. neither of the above
Q:
capitalizing an equipment lease means the equipment must be recorded on the books of the organization as: a. a purchase b. an expense of current operations c. neither of the above
Q:
a financial lease that meets purchase criteria should be treated on the books of the organization as: a. an asset b. a liability c. a current operating expense d. a and b e. none of the above
Q:
another source of capital is selling an additional interest in the organization. this method typically involves a for-profit corporation selling additional shares of common __________ to raise funds.
Q:
borrowing from a lending institution is a typical source of capital and is generally classified by the length of the loan. thus short-term borrowing is commonly expected to be repaid within a __________-month period.
Q:
dr. larry brown (dr. smith's cousin) is a partner in a physician practice partnership. the partnership owes $400,000 in debt and has $600,000 in partner's equity. thus the partnership capital structure, or debt-equity relationship, would be __________.
Q:
dr. robert smith's practice is preparing to open a second office location. the bank loan for new equipment and furnishings amounts to $20,000 at 12% per year. dr. smith will make monthly payments. how much interest expense will be due for the first month's payment on the loan? $__________.
Q:
the typical information contained in an amortization schedule commonly includes: payment number; total payment amount; principal portion of payment; __________ portion of payment; and remaining principal balance.
Q:
amortization expense is a noncash expense that is assigned to __________ reporting periods.
Q:
the term "loan costs" covers expenses necessary to __________ the loan.
Q:
a for-profit or proprietary company may be able to retain the excess of revenues over expenses (the operating profits) as a source of capital.
Q:
one example of borrowing from investors - assuming the organization is big enough and has the proper legal structure to do so - is that of selling certificates of deposit.
Q:
the prorated real estate taxes typically represent an expense to be reported in the current year.
Q:
points represent a certain percentage of the loan amount paid to cover costs of the prorated real estate tax.
Q:
when considering a real estate mortgage, which of the following questions are not relevant or are not appropriate? a. what is the roi (return on investment)? b. what is the interest rate (cost of money)? c. either of the above d. neither of the above
Q:
decisions about how to obtain capital: a. may impact long-term cash flow b. are an important part of financial management c. are an important part of financial decision making d. may have to work through a formal approval process e. all of the above f. none of the above
Q:
because of all the implications, management decisions about business loans are often interwoven with strategic planning. a. correct b. not correct c. not applicable
Q:
when management considers a real estate purchase that involves a mortgage, important considerations must be taken into account. which items in the list below should be considered before committing to a real estate mortgage? a. what is the potential risk factor? b. what is the liquidity prospect? c. what is the income tax impact, if any? d. a & b e. all of the above
Q:
using the same assumptions as the preceding question, what would the remaining principal balance be after the payment described above? a. $48,000 b. $47,200 c. $46,800 d. $49,200 e. none of the above
Q:
assume the following: the total payment amount is $1,600; the remaining principal balance before this next payment is $48,400; and the principal amount of this payment is $1,200. therefore the interest expense portion of this particular payment is: a. $400 b. $600 c. $1,200 d. $1,600 e. none of the above
Q:
assume loan cost points must be spread, or recognized, over several years. in that case, which of the following statements is not correct? a. the number of years over which the points will be recognized is determined b. each year a certain portion of the points cost will be charged to current operations c. the total cost of the loan cost points would first be placed on the balance sheet d. the annual charge would be recorded as an amortized expense e. all of the above are correct f. none of the above are correct
Q:
points typically represent a certain percentage of the loan amount paid and also help cover the costs of financing the loan a. correct b. not correct c. not applicable
Q:
assume the following: payment #1 totals $2,100 ($1,500 prinicipal and $600 interest expense); payment #2 totals $2,000 ($1,500 principal and $500 interest expense); and the remaining prinicipal balance after these two payments is $100,000. if the amortization schedules remaining principal balance column after these payments amounts to $100,000, what is the balance in the column before these payments? a. $103,000 b. $97,000 c. $104,100 d. $95,900 e. none of the above
Q:
assume the following: payment #1 totals $1,600 ($1,200 prinicipal and $400 interest expense); payment #2 totals $1,600 ($1,300 principal and $300 interest expense); and the remaining prinicipal balance before these two payments is $50,000. if the amortization schedules remaining principal balance column prior to these payments amounts to $50,000, what is the balance in the column after these payments? a. $47,500 b. $52,500 c. $53,200 d. $46,800 e. none of the above
Q:
not all amortization schedules are set up in the same way. of the column headings listed below, what heading would not appear on an amortization schedule? a. interest expense b. principal portion of payment c. closing cost portion d. remaining prinicipal balance e. cumulative principal f. cumulative interest g. none of the above
Q:
as can be seen in the chapters text and accompanying table, on a typical amortization schedule with a fixed payment amount, the interest expense becomes less on each payment and the prinicipal increases on each payment. conceptually speaking, why is this? a. because each decreasing principal amount means less interest is due b. because more of the fixed payment amount can be applied to prinicipal if there is less interest due c. because the fixed amount will not vary in total d. all of the above e. none of the above
Q:
not-for-profit organizations are generally bound by certain legal limitations, and thus they may: a. be able to raise funds through donations b. be able to rely upon a different income stream c. not be able to raise funds by selling an additional interest in the company (such as the sale of common stock) d. a & b e. b & c f. all of the above