CHAP CHAP Financial Management & Budgeting 2

Question 1

What is a capital budget in healthcare administration?

Accepted Answer

A plan for purchasing major assets such as equipment and facilities

Answer

A capital budget plans for major long-term investments in assets such as medical equipment, building renovations, or new facilities that exceed a defined cost threshold.

Question 2

Which metric measures the percentage of billed charges that are actually collected by a healthcare organization?

Accepted Answer

Net collection rate

Answer

The net collection rate measures the percentage of collectible charges actually received after contractual adjustments, indicating the effectiveness of collections efforts.

Question 3

In healthcare billing, what is a 'write-off'?

Accepted Answer

An uncollectible amount removed from accounts receivable

Answer

A write-off is an amount deemed uncollectible that is removed from accounts receivable, such as bad debt or amounts exceeding contractual agreements.

Question 4

What is the primary purpose of a cash flow statement in healthcare financial management?

Accepted Answer

To track the inflows and outflows of cash over a period

Answer

A cash flow statement tracks actual cash inflows (receipts) and outflows (payments) during a period, showing whether the organization has adequate liquidity.

Question 5

Which budgeting method starts from zero each period and requires justification for every expense?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires managers to justify every line item from scratch each budget cycle rather than simply adjusting prior-year figures.

(CHAP) Certified Healthcare Administrative Professional Practice Test

(CHAP) Certified Healthcare Administrative Professional Practice Test

CHAP CHAP Financial Management & Budgeting 2