FACHE Exam Week 1-12 Questions and Answers Updated 2023-2024 Latest Version/ FACHE Exam Q, Exams of Nursing

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FACHE Exam Week 1- 12 Questions and Answers Updated

2023 - 2024 Latest Version/ FACHE Exam Questions

Which of the following financial ratios is NOT important: a. Length of Stay (LOS) b. Occupancy Rate c. Size of community per occupied bed d. Salary per FTE -------- Correct Answer -------- C The steps in the budget process include all of the following except: a. Project volumes b. Converting volumes into expense requirements c. Projecting capital expenditures d. Adjusting revenues and expenses as necessary to meet budgeted margin -------- Correct Answer -------- C Organizations use income statements to determine profitability. When expenses exceed revenue, this is measured as: a. Net Income b. Net Loss c. Net Profitability d. Negative Revenue -------- Correct Answer -------- B. Net Loss or also known as Negative Net Income. Chapter 3: Healthcare Finance. Pg. 71 Of Moody's top 5 reasons for upgrades/downgrades in bond ratings, which is number 1? a. Cash flow and funding capital expenditures b. Market characteristics c. Financial performance d. Market share and physician composition -------- Correct Answer -------- C Which of the following is the healthcare provider's most preferred method of payment by third party payers: a. Charges minus a discount b. Charges without a discount c. Cost d. Per diem -------- Correct Answer -------- B The capital budget... a. Is completed prior to the operating budget b. Is completed after the operating budget c. Is completed simultaneously with the operating budget d. Is part of the strategic plan and therefore completed every 5 years. -------- Correct Answer -------- B

The income statement reports the results of operations over some period of time and has three key elements. Which one is NOT a key element of the income statement? a. Revenues b. Expenses c. Net Income d. Owners Equity -------- Correct Answer -------- D The organization provides care to a patient who the organization knows is unable to pay at the time of service is known as what method of payment (or lack there of)? a. Per Diem b. Bad Debt c. Cost d. Charity Care -------- Correct Answer -------- D Which type of reimbursement payment is least preferred by providers? a. Charges minus a discount b. Per diagnosis c. Capitation d. Per diem -------- Correct Answer -------- C. Capitation as a payment method provides the most financial risk and opportunity to the healthcare organization because the fixed amount is based on the cost of care projected to be used by the covered population, rather than the cost of care actually used. Which of the following is a mandatory bargaining topic? a) Benefits for retired employees b) Performance bonds c) Preferential hiring of union members over non-bargaining unit applicants d) job descriptions -------- Correct Answer -------- D. Job Descriptions Performance bonds and benefits for retired employees are voluntary, not mandatory bargaining topics. Also, it is illegal to bargain over preferential hiring of union members. With employee participation in an organization, all of the following promote productivity except: a) Guaranteed individual rights b) Measures to build individual effectiveness c) Some form of profit sharing or gain sharing d) Job security and long term employment -------- Correct Answer -------- Answer: B. Levine and Tyson noted that employee participation produces short run gains in productivity and some times substantial long term improvements. Apart from other characteristics described above, measures to build group cohesiveness, not individual effectiveness, and promotes productivity. Other studies also emphasize elements of group cohesiveness and individual rights, particularly the role of responsive supervisor. Which are not the most common types of questions asked in a structured interview? a) Situational b) Performance Based

c) Experience Based d) Work Requirement -------- Correct Answer -------- Answer: B. The most common types of questions asked in a structured interview are all included in A, C and D The position control function: a) Controls the number of hours worked but not the number of people employed b) Protects the organization against overspending c) Protects the organization against errors in hours, rates, and benefit coverage d) Controls the number of persons employed and affords certain protections paying the wrong person, over hiring, and issuing improper paychecks. -------- Correct Answer ------ -- Griffith & White, P. 613 (d.) ???? Patient Classifications Systems classify patient demand and nursing care based on: a) Diagnostic Category b) DRGs c) Number of FTEs d) Acuity or severity of illness -------- Correct Answer -------- Answer: D. Patient classification systems are tool that classify patients demand and nursing care based on acuity and severity not diagnostic category. Source: Bruce J. Fried, PhD. Slide-Patient Classification Systems Position Control protects an organization against all of the following except: a) Paying the wrong person b) Hiring in violation of the organization's established policies c) Overspending the labor budget d) Issuing duplication checks -------- Correct Answer -------- Answer: C. Position control does not protect against overspending the labor budget or against errors in hours, rates or benefit coverage. Current issues in compensation include all of the following except: a) Reconciling internal and external salary imbalances b) Management by objective c) Salary compression d) Broad banding -------- Correct Answer -------- b) Management by objective Which of the following is an advantage of internal recruitment? a) Bring new personnel into the organization b) May result in a lower cost for some jobs c) May lead to inbreeding d) May improve morale for those not selected for the position -------- Correct Answer ----- --- Answer: B. Freed lecture notes from PowerPoint slides. Advantages of internal recruitment include improved morale for those selected for the position. This may also lead to inbreeding which may or may not be considered a positive for the organization. The best answer is B. This hire may result in a lower cost for some jobs. It also can serve to motivate the selected individual to perform well in their new position.

Which of the following is NOT one of "The Three Phases of Labor Relations"? a) Collective Bargaining b) Union Organizing c) Contract Radification d) Contract Administration -------- Correct Answer -------- c) Contract Radification All of the following are ways to assess your recruitment efforts except: a) Quality of applicants b) Cost per applicant c) Length of interviews d) Quality of applicants -------- Correct Answer -------- c) Length of interviews All of the following are essential foundations for good grievance management except: a) Sound employment policies b) Effective education for supervisors and workers c) Systems that emphasize sanctions over rewards d) Supervisory training that emphasized the importance of responding promptly -------- Correct Answer -------- Answer: C. Rationale: Good grievance management does not emphasize sanctions over rewards. It emphasizes rewards over sanctions. All of the following are used to determine validity in employee selection tools except: a) External validity b) Criterion-related validity c) Content validity d) Construct validity -------- Correct Answer -------- Answer: A. Criterion related validity is the extent to which a selection tool is associated with job performance.

• Content validity is the extent to which a selection tool representatively samples the content for which the measure will be used
• Construct validity is the extent to which the selection tool measures the construct it is intended to answer If reductions in force are necessary, which of the following actions is most likely to cause impairment to the organization: a) Workforce planning allows the use of natural turnover to decrease the number of employees b) Terminations are based on a combination of performance reviews and the highest compensated staff at each position c) Temporary and part-time workers are reduced first d) Early retirement programs are used to encourage older employees to leaver voluntarily -------- Correct Answer -------- Answer: B. Terminations should be always be a last resort, and when used, they should be based on seniority (lack thereof) or other well understood rules that are judiciously applied. What is not a disadvantage of internal recruitment? a) In breeding b) Infighting for promotions

c) Lower cost d) Strong Management Development program requirement -------- Correct Answer -------

• Answer: C. Lower Cost is an advantage of internal recruitment From the perspective of potential employees, Vacancy characteristics that affect job choice include all of the following except: a) Job security b) Compensation c) Advancement opportunities d) Family situation -------- Correct Answer -------- d) Family situation What is not considered a type of Performance Management Interview? a) Developmental b) Promotional c) Maintenance d) Remedial -------- Correct Answer -------- Answer: B. Promotional is not a type of Performance Management Interview - the remainders are Formal vs. Informal and frequency. Health Insurance Portability & Accountability Act (HIPAA) is a Federal Law designed to facilitate the electronic exchange of information in health care. Which of the following does not pertain to this law? a) Privacy protection components of the law limit non-consensual use as a release or private health information b) Patients must receive notice of privacy rights c) Restrictions on access to and use of information is required d) Criminal and civil sanctions do not exist for improper use and disclosure -------- Correct Answer -------- D Separate computer systems are often linked together in order to share data and information. When all components of the network are located within close proximity of one another, perhaps within a single facility, the network known as a: a) Wide Area Network (WAN) b) World Wide Web (WWW) c) Local Area Network (LAN) d) Electronic Data Interchange (EDI) -------- Correct Answer -------- C Healthcare organizations had established standards to maintain data security and protect the privacy and confidentiality of patients' records information. Which one of the following answers does not describe its data security elements: a) Protect against system failures b) Protect against external catastrophic events c) Facilitate access to computer files to authorized personnel d) Control access to computer files by unauthorized personnel -------- Correct Answer --- ----- C

W Client/server architecture back-end (server) functions include all of the following except: a) Printing b) Applications program execution c) Decision support d) Communication -------- Correct Answer -------- C Star networks have an advantage of: a) Relative ease of wiring the network and relatively fast communications b) Facilitating construction of high spend networks that operate over large distances c) Ease with which nodes can be added to an existing network d) Require less cabling than networks using other topologies -------- Correct Answer ----- --- C. 1-refers to Bus networks, 2 refers to ring networks, and 4 is incorrect because Star networks require more cabling than other networks Advantages of outsourcing include all of the following except, a) Staffing reductions b) Increased implementation time c) Smaller capital investments d) More predictable costs -------- Correct Answer -------- B Although purchasing or leasing commercial software is most common, what is becoming a viable source of information technology and systems for smaller healthcare organizations? a) In house design and programming b) Outsourcing c) ASP-applications service provider d) Combining Outsourcing and in-house design -------- Correct Answer -------- C Which of the following is NOT one of the three general categories of information systems used in healthcare organizations: a) Clinical Information Systems b) Composite Healthcare Systems c) Administrative/Financial Systems d) Decision Support Systems for Strategic Management -------- Correct Answer -------- B A comprehensive information security policy should include all of the following elements except: a) Management Policies b) Data back up and recovery c) Physical security d) Technical controls -------- Correct Answer -------- B Which of the following is NOT part of the System Development Life Cycle? a) System Analysis b) System Adjustment

c) System Implementation d) System Acquisition -------- Correct Answer -------- B The Information Services Advisory Committee provides insight into user needs and helps gain acceptance of information systems. Which of the following is NOT a charge of the committee: a) Encouraging appropriate use of information services b) Ranking information services investment opportunities and recommending a rank- ordered list of proposals to the governing board. c) Providing technical support to implement an integrated information system. d) Monitoring performance of the department and suggesting possible improvements --- ----- Correct Answer -------- C One of the functions of an IS system is to ensure the integrity, quality, and security of data. Which of the following does not fall in this content area? a) Defines measures and terminology b) Captures historic as opposed to current data c) Improves the process for data input d) Guards against data loss -------- Correct Answer -------- B In the IT System Development Life Cycle, which is the most important step: a) System Analysis b) System Design c) System Acquisition d) System Implementation -------- Correct Answer -------- A Which of the following is not an actual active IT policy and Procedure components? a) Procedures against system failure and catastrophic events b) Control against viruses c) Quality of Software d) Confidentiality for authorized users -------- Correct Answer -------- C The importance of the Intranet vs. the Internet is that employees could: a) Evaluate Policies, Procedure, Protocols and organizational manuals b) Receive education sessions c) Communicate and interact with patients d) All -------- Correct Answer -------- D The type of computer network that allows multiple workstations to share the data contained in files on a server is called: a) Peer Network b) File/Server c) Terminal Host Systems d) Client/Server Computing -------- Correct Answer -------- B Which is not example of a Strategic Decision Support Application?

a) Strategic planning b) Disease management c) Marketing d) Resource allocation -------- Correct Answer -------- B Which of the following is not a key part of HIPAA Implementation: a) Establishment of enhanced privacy protection policies b) Establishment of compliance committees and private offices c) Establishment of clinical guidelines for patient care d) Use of HIPAA compliant software -------- Correct Answer -------- C Which is not a role of the Information Service Advisory Committee? a) Participation in the development of the IS plan, resolving the strategic priorities, and recommending the plan to the governing board. b) Encouraging appropriate use of information services c) Ranking IS investment opportunities and recommending a rank-ordered list of proposals to the governing board. d) Management of communication hardware -------- Correct Answer -------- D The role of the CIO includes: a) Advise executive team on use of information b) Oversee IT Department for Information Technology c) Oversee IT Department for Telecommunications d) Train and support end users -------- Correct Answer -------- Answer: This is a function of the IT Department PowerPoint Presentation?? The role of the CIO includes: a) Advise executive team on use of information b) Oversee IT Department for Information Technology c) Oversee IT Department for Telecommunications d) Train and support end users -------- Correct Answer -------- Answer: This is a function of the IT Department PowerPoint Presentation?? A three tiered architecture includes the following except the a) Client b) Relational database c) Programs application d) Third server -------- Correct Answer -------- D Key responsibilities of executives in Information Systems include all of the following except: a) Strategic planning b) Maintain technology-focused systems c) System integration d) Information security -------- Correct Answer -------- B. Maintaining a user focus is essential; otherwise end users will not use the system appropriately and effectively

Healthcare Managers' responsibilities in telecommunications activities include the following tasks except: a) Choosing software and hardware b) Defining roles and needs of the department c) Helping define specific data for their area's needs d) Overseeing technology activities within their area -------- Correct Answer -------- A The IS department has complete responsibility for the management of certain kinds of information including: a) Patient registration and placement records b) Files of patients unit record numbers c) Patient Medical record numbers d) All of the above -------- Correct Answer -------- D Which answer below defines a terminal-host system network configuration: a) A network that divides computing functions between two or more machines b) A network in which most processing takes place on the user's computer and the server is used to store the files c) A network in which processing is one on all of the computers, and each computer's resources are available to other computers on the network d) A network in which all of the processing is concentrated on a single machine and dumb terminals are connected to the host -------- Correct Answer -------- D The five functions of Information Services includes the following: a) Development of content for all clinical applications b) Maintenance of the information services plan c) Cost control d) Communication between all members of an organization -------- Correct Answer -------

• B Radio microwave signals travel in a straight line requiring what to follow curvature of the earth? a) Mirror b) Repeaters every 30 miles or satellite c) Drum d) Microphone -------- Correct Answer -------- B Which of the following is not an example of a breach of fiduciary duties? a) An executive who is distracted by a personal and/or a family situation, resulting in poor performance b) An executive whose judgment and effectiveness is impaired due to substance abuse c) An executive who relies on subordinates to relay appropriate information d) An executive who fails to maintain competencies in one's field -------- Correct Answer -------- C

When considering ethical principles useful to healthcare executives which of the following is incorrect? a) Respect for persons - including: Autonomy, Truth Telling, Confidentiality, Fidelity b) Beneficence - an obligation to act in charity and kindness c) Non-maleficience - first do no harm d) Justice - Maintain different levels of care and services based on social status and the ability to pay -------- Correct Answer -------- D. In short Justice is those needing equal care get it and those needing more care than others get the care needed. The notion of "Do unto others..." comes from which of the following moral philosophies? a) Natural Law b) Utilitarianism c) Deontology d) Virtue Ethics -------- Correct Answer -------- C Which of the following is not an element of consent: a) Competent b) Voluntary c) Ethical d) Informed -------- Correct Answer -------- A Which is not a form of a legal consent? a) Emergency b) Implicit c) Expressed d) Uninformed -------- Correct Answer -------- D Which one of the following is not a benefit of an ethical culture? a) Improve employee morale b) Increase employee satisfaction c) Positive public and community relations d) Better compliance with regulatory requirements -------- Correct Answer -------- A The following answer represents the sequence of events of a multi-step ethical decision-making process a) Identify affected stakeholders and values -- Clarify the ethical conflict -- Understand Circumstances surrounding the ethical conflict -- Identify the ethical perspective relevant to the conflict -- Identify different options for action -- Select among the options -- Share and Implement the decision -- Review the decision to ensure it achieved the desired goal. b) Clarify the ethical conflict -- Identify affected stakeholders and values -- Understand Circumstances surrounding the ethical conflict -- Identify the ethical perspective relevant to the conflict -- Identify different options for action -- Select among the options -- Share and Implement the decision -- Review the decision to ensure it achieved the desired goal.

c) Understand Circumstances surrounding the ethical conflict -- Clarify the ethical conflict -- Identify affected stakeholders and values -- Identify the ethical perspective relevant to the conflict -- Identify different options for action -- Select among the options -- Share and Implement the decision -- Review the decision to ensure it achieved the desired goal. d) Clarify the ethical conflict -- Identify affected stakeholders and values -- Identify the ethical perspective relevant to the conflict -- Understand Circumstances surrounding the ethical conflict -- Identify different options for action -- Select among the options -- Share and Implement the decision -- Review the decision to ensure it achieved the desired goal. -------- Correct Answer -------- B Which of the following statements about Ethics Self-Assessment is not true? a) The Ethics Self-Assessment tool is used to increase self-awareness b) The Ethics Self-Assessment is used to facilitate self-reflection c) The Ethics Self-Assessment is used as a basis for performance evaluations d) The Ethics Self-Assessment is used as a complement tool for ethics training and employee orientation -------- Correct Answer -------- C In regards to Healthcare Information Confidentiality, healthcare executives are responsible for all of the following, except: a) Ensure that institutional policies on confidentiality and release of information are consistent with regulations and law. b) Ensure that policies concerning the right of patients to have access to their own medical records and an accounting of disclosures are clearly established and understood by appropriate staff. c) Seek written agreements that detail the obligations of confidentiality and security for individuals and agencies who receive medical records information. d) Adopt procedures to address employee rights to request amendments of medical records and other right under the HIPPA Privacy Act -------- Correct Answer -------- D The purpose of a "Living Will" is: a) establish laws that define when life support measures are futile b) allow persons unable to communicate with caregivers to express their wishes about the extent of treatment they wish to have applied c) allow a person to take their own life if there is no hope for a productive life after a long term illness d) allow a person to define the distribution of material wealth after die -------- Correct Answer -------- A Which of the following is not a way to avoid or eliminate a conflict of interest? a) Disclosure b) Seeking guidance from governing body c) Divest from potential conflicting outside interest d) Accept gratuities and benefits -------- Correct Answer -------- D Which is the recommended first step to be taken in addressing a potential Ethical issue?

a) Understand the Circumstances Surrounding the Ethical Conflict b) Clarify the Ethical Conflict c) Identify all of the affected stakeholders and their values d) Identify the Ethical Perspectives Relevant to the Conflict -------- Correct Answer -------

• B Factors to take into consideration when addressing an ethical conflict include all of the following except: a) The mission statement and values of the organization b) The value-driven perspectives of key stakeholders c) The most desired option, regardless of perceived practicality d) A means of publicly disclosing the final decision, including the ethical reasoning -------
• Correct Answer -------- C What is NOT considered an ethical issue as it relates to patient care? a) DNR Orders b) Consent for invasive procedures c) Practice differences among physicians d) conflict of interest among professional staff -------- Correct Answer -------- C Which of the following is NOT a benefit a Healthcare Organization experiences when it fosters and demands and ethical environment? a) Improved employee morale b) Enhanced Professionalism c) Improved Productivity d) Increased Patient Satisfaction e) Better Compliance with Regulatory Requirements -------- Correct Answer -------- C To be legally liable, directors must have committed an act of gross negligence, usually defined as an intentional failure to perform a manifest duty with reckless disregard of the consequences refers to: a) Justice b) Virtue ethics c) Minority rule d) Moral justification -------- Correct Answer -------- C Which of the following is not one of the Ethical Principles? a) Respect for persons b) Justice c) Professionalism d) Beneficence -------- Correct Answer -------- C Which of the following are hallmarks of conflicts of interest? a) Competing obligations b) Appearance of impropriety c) Myopia or being too close to a situation to see it clearly

d) Fairness e) Confusion between official and unofficial power f) All of the above -------- Correct Answer -------- F Which of the following does not express a hallmark conflict of interest issue relating to causes of conflicts of interest. a) Myopia, being to close to a situation to not see it as clearly as those who are not b) Confusion, the confusion between official power and unofficial power. c) Competing obligations: obligation to organization versus obligation to a friend d) Disclosure, disclosing information that contains significant financial, personal, and professional relationships that may affect decisions -------- Correct Answer -------- D When considering moral philosophies and principles, the health services organization should do all of the following except: a) Implement a philosophical view that is reflected in its policies and procedures b) Devise a plan it will take when confronted with ethical problems such as child abuse c) Inform managers that the positive duty suggested by the principle of beneficence requires the organization and managers to do all they can to aid patients d) Avoid expending greater resources on individuals who are sicker and thus in need of more services -------- Correct Answer -------- D Which of the following is not an ACHE ethical policy statement? a) Decisions near end of life b) Ethical issues related to staff shortages c) Ethics and physicians conduct d) Impaired healthcare executives -------- Correct Answer -------- C The legal aspects of consent include all of the following EXCEPT: a) Voluntary b) Informed c) Medically sound d) Competent -------- Correct Answer -------- C All of the following are types of Euthanasia except: a) Passive b) Active c) Voluntary d) Physician assisted suicide -------- Correct Answer -------- D Which moral philosophy has a focus on what makes a "good person" rather than on what makes a "good action"? a) Natural Law b) Rawls c) Casuistry and ethics of care d) Virtue ethics -------- Correct Answer -------- D

________holds that divine law has inscribed certain potentialities in all things, which constitute the food of those things. __________is based on Aristotelian thought as interpreted and synthesized with Christian dogma by St. Thomas Aquinas. a) Natural Law, Natural Law b) Natural Law, Deontology c) Utilitarianism, Rawl's Theorgy d) Deontology, Utilitarianism -------- Correct Answer -------- A What is the difference between act utility and rule utility when considering the Utilitarianism philosophy? a) "Act" believes if it feels good do it whereas "rule" plays strictly by the rule book b) "Act" measures the amount of good and the amount of bad brought about by a decision whereas "rule" considers the amount of good and the amount of bad brought about by the action and then develops a set of rules for an action c) "Act" only considers one person to be affected whereas "rule" looks at everyone affected d) "Act" sometimes references pre-established rules whereas "rule" considers rules "on the fly" -------- Correct Answer -------- B Which of the following actions is best suited to offset any claims of conflict when voting on hospital fiduciary issues? a) Review the organization's written investment policy prior to the meeting b) Establish a process for regular disclosure c) Resign from other boards in the community d) Sell personal stock portfolio -------- Correct Answer -------- B The Ethical Principle that obligates an individual to act with charity and kindness is: a) Respect for persons b) Beneficence c) Nonmaleficence d) Justice -------- Correct Answer -------- B Which statement below is not accurate about Advance Medical Directives (AMDs). a) All patients must receive written information about their rights under state law to accept or refuse medical or surgical treatment and to formulate AMDs. b) All patients must be given the provider's written policies about implementing these rights. c) Medical records must document whether a patient executed an AMD. d) Providers are required to educate their staff and communities about AMD. -------- Correct Answer -------- B. All adult patients must be given the provider's written policies about implementing their rights under law to accept or refuse medical or surgical treatment and to formulate AMDs. Which of the following is not an Advanced Medical Directive? a) Living wills b) Euthanasia

c) Surrogate decision making d) Do not resusitate -------- Correct Answer -------- B Which principle of Ethics takes the approach of First Do No Harm? a) Respect for persons b) Beneficence c) Non maleficence d) Justice - ------- Correct Answer -------- C Depreciation expense that is calculated in accordance with GAAP using the straight-line method is obtained by: a. Dividing the historical cost of the asset by the number of years of its estimated useful life. b. Dividing the historical cost of the asset by the annual cost of maintaining the asset. c. Dividing the present-day value of the asset by the number of years of its estimated useful life. d. Dividing the historical cost of the asset (less its estimated salvage value) by the number of years of its estimated useful life. -------- Correct Answer -------- D What methods of payment are the most preferable and the least preferable to the provider's point of view? a. Charges minus a discount; cost plus a percentage for growth b. Cost; per diem c. charges; cost d. charges; capitation -------- Correct Answer -------- D As to the Manage Care Continuum, from the least control to the most control, which of the following orders is correct? a. Managed Indemnity->Service Plans->Closed-Panel HMO's b. Closed-Panel HMO's->Service Plans->Managed indemnity c. Service Plans->Closed-Panel HMO's->Open-Panel HMO's d. Point-of-Service Plans->Closed-Panel HMO's->Preferred Provider Plans -------- Correct Answer -------- A The prerequisites for building the operating budget include all but one of the following: a. Well-defined chart of accounts b. Sound organizational chart c. Prompt and accurate accounting system d. Defined short payback period e. Comprehensive management information system f. Budget director and budget committee g. Budget manual and calendar -------- Correct Answer -------- D Of the four design characteristics of budgeting, which characteristic integrates budgets into one document? a. Incremental versus Zero Based Budgeting

b. Comprehensive versus Limited in-Scope budgeting c. Fixed versus Flexible Budgeting d. Discrete Versus continuous Budgeting -------- Correct Answer -------- B Which of the following is not a step in the capital budgeting processes: a. Identify and prioritize all of the requests b. Projecting bad debt for the year c. Project cash flows d. Perform financial analysis -------- Correct Answer -------- B. Projecting bad debt for the year is not part of the "capital" budgeting process What organization sets regulations for financial accounting: a. Financial Accounting Standards Board b. American Institute of Certified Public Accountants c. Security and Exchange Commission d. Healthcare Financial Management Association -------- Correct Answer -------- C Managerial Accounting focuses primarily on all of the following except: a. Routine budgeting processes b. Allocation of bonuses c. Historical Events d. Needs of managers -------- Correct Answer -------- C Which statement most closely describes the purpose or function of financial accounting: a. It produces the data for profitability and comparability tests b. It restructures transaction accounting data to support planning, setting expectations, and improving performance. c. It records and reports all transactions affecting the value of the firm and it subsidiaries d. It states as accurately as possible the position of the institution as a whole in terms of the value of its assets, the equity residual to its owners, and the change in value occurring in each accounting period. -------- Correct Answer -------- Answer: D. Choices A and B pertains to managerial accounting: choice C describes transaction accounting. Source: The Well Managed Healthcare Organization, p. 529. Good financial and annual reports have the following characteristics in common with the exception of: a. Clarity b. Strategic c. Timely d. Accurate -------- Correct Answer -------- B A basic concept in financial accounting is "consistency". This means: a. Choosing an approach that is least likely to overstate the organization's financial condition. b. Providing the common basis by which economic events are measured. c. Involving the application of like guidelines to a single accounting entity over time.

d. The length of time over which an organization's managers, or outside parties, use to evaluate results. -------- Correct Answer -------- C. a: conservatism, b: monetary and d: accounting period Financial Accounting Basics and the Income Statement, pages 63- 65 What capital structure ratio is considered the best production of financial failure in an organization? a. Net asset financing b. Long-term debt to net assets c. Debt service coverage d. Cash flow-to-debt -------- Correct Answer -------- D Which of the following statement about costs is not true: a. Forecasts are prepared from multiple sources with substantial assistance from the budge or financial staff. b. Events such as births, hospitalizations, emergency room visits and surgeries can be accurately forecast by statistical analysis of market trends combine with judgments of the executive personnel. c. If correctly performed, forecasting is an exact science. d. Forecasting includes applying the rates of anticipated future change to the current status to predict the future. -------- Correct Answer -------- C Forecasting is not an exact science. It is a prediction based on solid data. ACHE Manual for the Board of Governors Examination in Healthcare Management. The Well-Managed Healthcare Organization Griffith/White p. 543 Which of the following is not one of Moody's top five reasons for issuing an upgrade or downgrade for a healthcare organizations bond? a. Financial performance b. Market share and physician composition c. Cash flow and capital expenditures d. Market characteristics e. Board stability and leadership characteristics. -------- Correct Answer -------- E The first three major steps in developing operating budgets are: a. Review of plans and financial resource, preparation of information packages and preparation of decision packages. b. Preparation of decision packages, delivery of packages, and decisions making c. Decision preparation, delivery of packages, decision making d. Preparation of information packages, delivery of packages, purchase decisions -------- Correct Answer -------- Answer: Major steps in developing operations budgets: review of plans and financial resources; preparation of information packages; preparation of decision packages; reiterations of step 3 to improve compliance with guidelines from step 1; recommendation of final budget to board; and, and distribution of copies of approved budget and implementation. Which of the following is not one of Moody's 5 reasons for Upgrades?

a. Financial Performance b. Business decisions c. Market characteristics d. Medical staff characteristics -------- Correct Answer -------- D Indirect costs: a. Are provided directly to a patient b. Amount to ½ of all healthcare costs c. Amount of 1/3 of all healthcare costs and are services provided to another revenue center d. Can be controlled by a revenue center -------- Correct Answer -------- C The independent auditors opinion at the end of an external audit which represents that statements do not present a fair picture of the financial status of the business is called: a. A qualified opinion b. An adverse opinion c. An unfair opinion d. An unqualified opinion -------- Correct Answer -------- B Source: The Financial Management of Healthcare Organizations, Nowicki, Chapter 3, p.61 and 62. What is the difference between Managerial and Financial accounting and its relations to time? a. There is no difference both methods are used to determine the financial position of an organization. b. Managerial accounting pertains to future and data is focused on subunits, where as Financial accounting focus is on a specific point in time and used predominately by stakeholders. c. Financial accounting and managerial accounting summarize economic events and always used by managers and stakeholders. d. Managerial and financial accounting is used to help manage a larger number of accounts. -------- Correct Answer -------- B. Healthcare Finance Chapters 3 Financial Accounting Basics and the Income Statement and 5 Managerial Accounting Basics, Cost Behavior and Profit Analysis Cost behavior concept consists of both variable and fixed cost; as such costs are volume sensitive. Therefore, Variable Cost Rate: a. Remains the same when volume increase b. Total variable cost increase with volume c. Fixed cost decrease with volume d. Variable cost rate always changes. -------- Correct Answer -------- A. Healthcare Finance-Chapter 5 pp.132. Variable Cost Rate is not affected by activity; however, Total Variable Cost increase or decrease proportionately as activity changes The three components of financial management are: a. Financial planning, long term capital acquisition, short term assets/liabilities b. Financial planning, resource consumption, resource conservation

c. Net revenue, net costs, liabilities d. Revenue, costs, liabilities -------- Correct Answer -------- A. Ref: The Well Managed Healthcare Organization by John R. Griffith. Which method of payment provides the least incentive for the healthcare organization to provide only what is medically appropriate? a. Per Diem b. Per Diagnosis c. Capitation d. Charges -------- Correct Answer -------- D. Charges - Organization will receive payment for all expenses, therefore benefits from additional testing, etc. Managerial accounting test of costs and revenues include all of the following test except: a. Control b. Comparability c. Validity d. Profitability -------- Correct Answer -------- Answer: C. Managerial accounting test include control, comparability, and profitability. Griffith, The Well-Managed Healthcare Organization, pg. 521
What is the difference between the income statement, statement of cash flows, and contribution margin? a. Income Statement - Presents revenue earned and expenses incurred over a period of time b. Statement of cash flows - Presents either directly or indirectly the major sources of case and the major uses cash. Shows sources and uses from operating activities, investing activities, and financing activities. c. Contribution margin - is calculated by subtracting variable cost from price. Thus amount per item indicates the amount each sale contributes towards fixed cost. The higher the contribution margin the faster you will cover fixed costs and begins making money. -------- Correct Answer -------- ?? Which of the following is NOT a form of Distributional Error when using rating as a form of performance appraisal? a) Leniency b) Harshness c) Strictness d) Central Tendency -------- Correct Answer -------- b) Harshness A common method of determining the salary for a new position is to utilize a point method. Each compensable factor is scored for the specific position and a salary calculated based on these points. The Hay Guide Chart Profile, a widely used point system, utilizes all of the following key criteria except: a) Accountability b) Problem Solving

c) Shift-Work d) Know-How -------- Correct Answer -------- c) Shift-Work All of the following personal activities and services are commonly offered to employees in healthcare organizations except: a) Employee Assistance Programs b) Infant and child care c) Credit Unions and payroll deductions d) Termination Protection Insurance -------- Correct Answer -------- Answer: The Well- Managed Healthcare Organization Book, page 606.??? When an interviewer asks general questions to prompt applicant to discuss himself/herself, this is referred to as: a) Standardized interview b) Unstructured/nondirective interview c) Stress interview d) Situational interview -------- Correct Answer -------- b) Unstructured/nondirective interview Which isn't a disadvantage of job classification: a) Uses objective judgments b) Uses subjective judgments c) Relies on job titles d) Doesn't always consider differences across organizations -------- Correct Answer ------ -- a) Uses objective judgments Which of the following is not a means management might use when attempting to avoid unionization? a) Prevention b) Substitution c) Forbiddance d) Suppression -------- Correct Answer -------- c) Forbiddance Which describes the traditional approach to compensation? a) Looks more broadly to what is paid, variable pay added to base. b) Short and long term incentives for all employees, flexible benefits c) Fixed benefits, primarily base pay d) Knowledge and skill and based, board bands determine pay grades -------- Correct Answer -------- c) Fixed benefits, primarily base pay Incentive Compensation should take into consideration a) Entitlement b) Longevity c) Overall performance

d) Cost-of-living adjustments -------- Correct Answer -------- Answer: C. Incentives are related to overall performance and are awarded to individuals based on their perceived contribution. Performance criteria are measurable standards used for assessing employee performance. Performance criteria should a) Reflect the organizational goals b) Be specific to what the employee can control c) Be reliable and valid d) All of the above -------- Correct Answer -------- d) All of the above The following are all methods of job evaluation EXCEPT: a) Point method b) Job ranking c) Job classification d) Behaviorally anchored rating scale -------- Correct Answer -------- Answer: D. The behaviorally anchored rating scale is a technique of performance appraisal The Employee Retirement Insurance Security Act (ERISA) regulates which of the following: a) Funding of unvested pension liabilities b) The employer's obligation to offer pensions and contribute to them if offered, to vest those contributions, and to fund pension liabilities through trust arrangements. c) The dollar value of incentives used to encourage or discourage retirement at age 65 d) The division of investment between equity and fixed dollar obligations and selection of those investments -------- Correct Answer -------- Answer: B.

• The pension itself, but not necessarily other retirement benefits, is regulated under ERISA. Regulations for ERISA specify the employer's obligation to offer pensions, to contribute to them if offered, to best those contributions and to fund pension liabilities. Which of the following is a true statement about the Employee Retirement Insurance Security Ace (ERISA)? a) ERISA regulates both the pension and other retirement benefits b) ERISA regulates the amount, kind and design of Medicare supplementation c) ERISA regulates the funding of unvested pension liabilities d) ERISA regulates a trust fund to support pension payments -------- Correct Answer ---- ---- d) ERISA regulates a trust fund to support pension payments Which measure is NOT considered a measure of human resources department a) Demand b) Costs and Efficiency c) Quality d) Systems -------- Correct Answer -------- d) Systems

What type of performance management interview is most likely to be utilized for an employee who is a high performer with high potential? a) Maintenance b) Remedial c) Developmental d) Management by Objective (MBO) -------- Correct Answer -------- c) Developmental Which of the following is NOT a phase in Labor Relations: a) Union Organizing b) Collective Bargaining c) Striking d) Contract Administration -------- Correct Answer -------- c) Striking The voting rights of "Ex Officio" members is determined by: a) The CEO b) The Board Chair c) The By-laws d) The Governance Committee -------- Correct Answer -------- C Which of the following is not a reason for sanctions to be brought against members of a governing board? a) Unreasonable compensation b) Revenue based compensation c) Participation in bargain sales d) Assumption of management verses governance role -------- Correct Answer -------- D The most effective number of members of a Board of Directors is: a) 16- 25 b) 10- 15 c) 8- 10 d) 5- 8 -------- Correct Answer -------- B Which of the following is not a managerial function of the Board: a) Ensure the quality of medical care b) Approve long range plans and the annual budget c) Select and supervise employees of the organization d) Appoint or terminate the chief executive -------- Correct Answer -------- C Which of the following is not a common board committee? a) Executive b) Finance c) Medical Bylaws d) Quality -------- Correct Answer -------- C What are the five Managerial Functions of the Governing Board?

a) Est. Mission/Vision--Appoint CEO--Approve long rang plans--Monitor quality of medical care—Est Organizational Values b) Appoint CEO--Monitor Performance against plans--Ensure quality of care--approve long range plans--establish mission/vision c) Appoint CEO--Establish mission/vision/values--Approve long range plans and annual budget--Ensure quality of medical care--monitor performance against plan and budget. d) Establish mission/vision--approve long range plans--quality assurance--appoint CEO-

• community spokesperson -------- Correct Answer -------- C The board chair should not demonstrate which of the following qualities: a) Mentor others on the board b) Be decisive and move the board to action c) Commandeer the Board d) Cultivate an effective working relationship with the CEO -------- Correct Answer -------- C As CEO, one must do the following, except: a) Be visionary and inspire the board b) Avoid springing information on the board c) Communicate effectively and frequently d) Avoid calculated risks -------- Correct Answer -------- D The Board of Directors obligations include: a) The duty of care, the duty of loyalty, the duty of disclosure b) The duty of loyalty, the duty of disclosure, the duty of ethical practice c) The duty of confidentiality, the business judgment rule, duty of sound investment d) The business judgment rule, the duty of care, the duty of loyalty, the duty of finance -- ------ Correct Answer -------- A Which of the following is not a universal truth for board chairs? a) Cultivate an effective working relationship with the CEO b) Mentor others on the board c) Command and control the board d) Walk the straight and narrow -------- Correct Answer -------- C Duty of loyalty requires that directors: a) Inform fellow directors about material important to the organization b) Keep confidential all matters involving the organization c) Conduct be in the best interest of the organization d) Be liable for their actions -------- Correct Answer -------- C Which of the following statement is not true about intermediate sanctions? a) They can be put in place rather than punishing an organization. b) They protect directors from being held liable for their actions. c) They can cause an organization to lose its non-profit status and perhaps pay back taxes.

d) They can cause the director to be held liable for their actions -------- Correct Answer -- ------ B The Chair/President of the Board Works with the CEO in all the following areas except: a) Preparing agenda for board b) Negotiation of CEO compensation c) Evaluate board performance d) Managing the senior management of the company -------- Correct Answer -------- D A board member is not considered to have a conflict of interest if a) Has a compensation arrangement with a Corporation, entity or individual that the Corporation has a transaction has a transaction. b) The board decides that no conflict of interest exists. c) An ownership or investment interest in any entity with which the Corporation has a transaction or arrangement. d) A potential ownership or investment interest with any Corporation, entity or individual with which the Corporation is negotiating a transaction. -------- Correct Answer -------- B The audit committee can be best described as a) Working under the finance committee b) Is mandated by the strategic committee c) Is not required to work or file a report with an outside audit agency for ensure safeguards are in place and statements are accurate d) Is a result and required of the Sarbanes-Oxley Act of 2002 -------- Correct Answer ---- ---- D The Sarbanes-Oxley Act of 2002 is now considered best practice the five areas Non- Profit Organizations must concern themselves with are: a) Reorganizing their financial committee b) Executive certification of financial c) Developing an ethics committee d) Setting standards for the Quality Committee -------- Correct Answer -------- B Which is not a legal issue in Trusteeship a) Trustee liability b) Trustee compensation c) Good faith practice d) Conflict of interest -------- Correct Answer -------- C Extraordinary matters normally requiring the vote of board members include all of the following except: a) Sale or lease of real estate b) Adopting or amending the bylaws c) Voluntary bankruptcy d) Approving Quality Indicators -------- Correct Answer -------- D

The most critical committee that requires tenured board members are: a) Audit Committee b) Finance Committee c) Nominating Committee d) Executive Committee -------- Correct Answer -------- C Which of the following board responsibilities is incorrect: a) Conduct a search for a new CEO b) Liaison between the hospital organization and public c) Director operations of a high level expansion project d) Monitor the organization programs and services -------- Correct Answer -------- C The Chair/President of the Board works with the CEO in all the following areas except: a) Preparing agenda for board b) Negotiation of CEO compensation c) Evaluate board performance d) Managing the senior management of the company -------- Correct Answer -------- D A board member is not considered to have a conflict of interest if: a) Has a compensation arrangement with a Corporation, entity or individual that the Corporation has a transaction b) The board decides that no conflict of interest exists c) An ownership or investment interest in any entity with which the Corporation has a transaction or arrangement d) A potential ownership or investment interest with any Corporation, entity or individual with which the Corporation is negotiating a transaction -------- Correct Answer -------- B The audit committee can be best described as: a) Working under the finance committee b) Is mandated by the strategic committee c) Is not required to work or file a report with an outside audit agency for ensure safeguards are in place and statements are accurate d) Is a result and required of the Sarbanes-Oxley Act of 2002 -------- Correct Answer ---- ---- D The Sarbanes-Oxley Act of 2002 is now considered best practice the five areas Non- Profit Organizations must concern themselves with are: a) Reorganizing their financial committee b) Executive certification of financial c) Developing an ethics committee d) Setting standards for the Quality Committee -------- Correct Answer -------- B Which of the following is Not an obligation of a hospital board as pertaining to inpatient care: a) Approval of Medical staff bylaws b) Appointment of medical staff leadership