HCAD 375 Final Exam Questions with Correct Answers-
Latest 2024 Update.
1. Planning delineates both _________________ & __________________ paths a
business will follow and what _____________________ it will utilize to achieve its goal.
- Correct Answer short term, long term, procedures
A budget states your goals in ________________ terms - Correct Answer monetary
Rather than budgeting dollars, a staffing and census budget typically budgets
_______________ PPD. - Correct Answer acuity
What are the 2 major components of an operating budget? - Correct Answer Revenue
and expense budgets
Budgeting for new equipment is generally part of which type of budget? - Correct
Answer Capital budget
How often should capital needs be forecasted? - Correct Answer Annually
What are some factors that should be considered when prioritizing capital needs? -
Correct Answer -need
-amount of working capital projected to be available to your facility
Describe 3 types of common forecasts used in health care budgeting. - Correct Answer
Short range- usually annual which deals with next year and planning the budget
Intermediate Range- 5 years from today with strategic planning
Long Range- 10+ years with strategic planning
What type of assumptions and information are necessary to generate a revenue
forecast? - Correct Answer Data and trends such as utilization changes, patient mix
changes, rate changes, and volume or capacity. Having accurate data and using that
data will give you better assumptions. You can only forecast as good as your
assumptions.
In health care what commonly contributes to capacity limitations? - Correct Answer -
space and equipment availability
-staffing
What are the objectives/uses of a budget? - Correct Answer -Is a written plan that
quantifies the activities of your organization into financial terms
-serves as the basis for evaluating financial performance according to policies and plans
-is a useful tool for cost control
-creates cost awareness throughout the organization
, Describe the difference between Authoritarian versus Participatory budgeting
approaches, including advantages and disadvantages to each? - Correct Answer
Participatory approach requires participation from a number of individuals within the
organization in the budgeting process, which an Authoritarian approach requires great
data and good communication throughout the year. Advantages of the Participatory
approach is that folks from the top are getting input from department heads while a
disadvantage is it can take while to gather that information and create a target budget.
Advantages of the Authoritarian approach is that the organization did have sufficient
enough communication throughout the year for the board to make an informed decision
with the data they have to create a budget in a timely manner while a disadvantage is
that there is none of the back and forth approach like Participatory.
Describe the difference between Incremental/Decremental versus Zero-based
budgeting. What are the advantages and disadvantages to each? - Correct Answer
Incremental/Decremental is when you start with the budget you had last year and tweak
those numbers up or down from year to year. An advantage to this is that you don't
have to start from scratch when determining a budget while a disadvantage is that some
departments might start to spend a lot in the last 3-4 months of the fiscal year so that
their budget for the next year doesn't get cut. Zero-Base is when everyone starts a
budget from scrap. An advantage of this is that if there are major budget cuts or major
changes within your organization and you really need to restructure, that everyone
needs to justify or provide rational as to why they would need something included in the
budget while a disadvantage is that it is extremely time consuming and that you may not
have the right people making those decisions.
In participatory budgeting, describe who is involved, the process, and a typical
timeframe for the endeavor? - Correct Answer -board, top management, marketing
department, treasurer, department heads, physicians, staff
-process is that feedback is given to the board about what should be included in the
budget for the next year, the board makes a budget and then proposes it to the
administrator/staff and then there can be a bit of back and forth unitl they reach an
agreed upon budget.
-Joh's said typically 4 months but can take longer or less time
What is a capital budget used for? - Correct Answer Capital budget is used for bigger,
larger, one-time purchases such as equipment or building structures. It is also important
when starting up a new service line or expanding because of the upfront expenses
associated with that.
The "income statement" may also be called the _______________________________
statement - Correct Answer "profit and loss"
Which financial statement do LTC administrators use most often when analyzing
monthly financial activity? - Correct Answer Income statement
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