CALA CALA Financial Management & Budgeting 2 — Questions and Answers
Question 1: What financial metric measures the percentage of revenue remaining after all operating expenses are paid?
- Gross margin
- Operating profit margin (Correct answer)
- Current ratio
- Debt-to-equity ratio
Correct answer: Operating profit margin
Operating profit margin measures how much profit remains from revenues after subtracting all operating expenses, expressed as a percentage.
Question 2: Which Medicaid program most commonly funds assisted living services for low-income residents in the US?
- Medicaid Fee-for-Service
- Home and Community-Based Services (HCBS) waivers (Correct answer)
- Medicare Part B
- CHIP program
Correct answer: Home and Community-Based Services (HCBS) waivers
Medicaid HCBS waivers are the primary mechanism states use to fund assisted living and similar residential care services for eligible low-income individuals.
Question 3: An assisted living administrator is conducting a variance analysis. What does a negative variance in labor costs indicate?
- Labor costs were lower than budgeted
- Labor costs were higher than budgeted (Correct answer)
- There was no overtime incurred
- Staff turnover was below average
Correct answer: Labor costs were higher than budgeted
In expense categories, a negative variance means actual costs exceeded the budgeted amount, indicating overspending on labor.
Question 4: What is the purpose of a capital expenditure budget in an assisted living facility?
- Track daily operational spending
- Plan for major asset purchases and facility improvements (Correct answer)
- Monitor payroll expenses
- Forecast short-term cash needs
Correct answer: Plan for major asset purchases and facility improvements
A capital expenditure budget plans for the purchase or improvement of long-term assets such as equipment, renovations, or major facility upgrades.
Question 5: Which document provides an assisted living administrator with a month-by-month projection of cash inflows and outflows?
- Balance sheet
- Cash flow projection (Correct answer)
- Profit and loss statement
- Depreciation schedule
Correct answer: Cash flow projection
A cash flow projection forecasts when money will come in and go out each month, helping the administrator ensure the facility can meet its financial obligations.
Question 6: In assisted living billing, what is a 'level of care' fee structure?
- A flat monthly rate for all residents
- A tiered pricing model where fees increase based on the amount of assistance a resident requires (Correct answer)
- A government-mandated pricing cap
- A one-time admission fee
Correct answer: A tiered pricing model where fees increase based on the amount of assistance a resident requires
A level of care fee structure charges residents different rates depending on their assessed needs, with higher care needs resulting in higher fees.
CALA CALA Financial Management & Budgeting 2
What financial metric measures the percentage of revenue remaining after all operating expenses are paid?