1. A hospital reports the following information: Estimated bad debts—non-charity patients $ 500,000 Contractual adjustments—third party payors 1,000,000 Direct gross billings to non-charity patients 5,000,000 Gross billings to insurance companies and Medicare/Medicaid 17,000,000 Charity care, estimated billing value 2,000,000 Charity care, cost 1,200,000 Net patient service revenue, as reported on the hospital's statement of activities, is: 2. NFP organizations like the Red Cross invest in derivatives to hedge their financial risks. How do the accounting standards for NFP hedge investments differ from the accounting standards for other NFP investments? Select one: A. There is no difference. B. Unrealized gains and losses on hedge investments are reported as changes in net assets with donor restrictions on the statement of activities, while unrealized gains and losses on other investments are not reported. C. Unrealized gains and losses on hedge investments are not reported, while unrealized gains and losses on other investments are reported as changes in net assets without donor restrictions on the statement of activities. D. Unrealized gains and losses on hedge investments are deferred on the statement of financial position until the hedged item is reported on the statement of activities, while unrealized gains and losses on other investments are reported as a change in net assets without donor restrictions on the statement of activities.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A hospital reports the following information:

Estimated bad debts—non-charity patients	$ 500,000
Contractual adjustments—third party payors	1,000,000
Direct gross billings to non-charity patients	5,000,000
Gross billings to insurance companies and Medicare/Medicaid	17,000,000
Charity care, estimated billing value	2,000,000
Charity care, cost	1,200,000

Net patient service revenue, as reported on the hospital's statement of activities, is:

NFP organizations like the Red Cross invest in derivatives to hedge their financial risks. How do the accounting standards for NFP hedge investments differ from the accounting standards for other NFP investments?

Select one:

A. There is no difference.

B. Unrealized gains and losses on hedge investments are reported as changes in net assets with donor restrictions on the statement of activities, while unrealized gains and losses on other investments are not reported.

C. Unrealized gains and losses on hedge investments are not reported, while unrealized gains and losses on other investments are reported as changes in net assets without donor restrictions on the statement of activities.

D. Unrealized gains and losses on hedge investments are deferred on the statement of financial position until the hedged item is reported on the statement of activities, while unrealized gains and losses on other investments are reported as a change in net assets without donor restrictions on the statement of activities.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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