CHE Financial Management 2

Question 1

Which costing method allocates overhead costs based on the actual activities that consume resources?

Accepted Answer

Activity-based costing (ABC)

Answer

Activity-based costing allocates overhead and indirect costs to services based on the specific activities that drive resource consumption, providing more accurate cost data.

Question 2

In healthcare revenue cycle management, the 'clean claim rate' measures:

Accepted Answer

Percentage of claims submitted without errors that don't require additional information before payment

Answer

The clean claim rate is the percentage of claims that pass all edits and are accepted for processing without requiring additional information or correction.

Question 3

A break-even analysis for a new healthcare service determines:

Accepted Answer

The volume of services needed to cover all fixed and variable costs with no profit or loss

Answer

Break-even analysis calculates the minimum volume or revenue at which total costs exactly equal total revenue, resulting in neither profit nor loss.

Question 4

Uncompensated care in hospitals includes which two components?

Accepted Answer

Charity care (free care to the uninsured) and bad debt (unpaid bills)

Answer

Uncompensated care consists of charity care provided without expectation of payment and bad debt from patients who had financial responsibility but did not pay.

Question 5

A healthcare organization's debt-to-equity ratio measures:

Accepted Answer

The proportion of financing from creditors relative to the organization's own resources

Answer

The debt-to-equity ratio measures how much an organization relies on debt financing compared to equity (net assets), indicating financial leverage and risk.

CHE - Certified Healthcare Executive Practice Test

CHE - Certified Healthcare Executive Practice Test

CHE Financial Management 2