CMAS CMAS Financial Management & Accounting 1 — Questions and Answers
Question 1: Which financial statement summarizes a medical practice's revenues, expenses, and net income over a specific period?
- Balance sheet
- Income statement (Correct answer)
- Cash flow statement
- Accounts receivable report
Correct answer: Income statement
The income statement (profit and loss statement) shows revenues, expenses, and net income over a defined accounting period.
Question 2: A medical office's accounts receivable (A/R) aging report shows a large balance in the 90–120 day column. What is the BEST immediate action?
- Write off all balances over 90 days
- Review and follow up on unpaid claims with insurers and patients (Correct answer)
- Increase patient copays to offset losses
- Suspend billing operations temporarily
Correct answer: Review and follow up on unpaid claims with insurers and patients
Reviewing and following up on overdue claims is the appropriate step to recover revenue before balances become uncollectible.
Question 3: What does the term 'days in A/R' measure in a medical practice?
- The number of days staff spend on billing tasks
- The average number of days it takes to collect payment after a service is rendered (Correct answer)
- The number of days before a claim is submitted to insurance
- The time between patient scheduling and the appointment date
Correct answer: The average number of days it takes to collect payment after a service is rendered
Days in A/R measures the average time to collect payment, with lower values indicating more efficient revenue cycle management.
Question 4: Which of the following best describes petty cash management in a medical office?
- Using petty cash to pay employee salaries
- Maintaining a small cash fund for minor incidental expenses with a log of transactions (Correct answer)
- Depositing all cash receipts directly into petty cash
- Combining petty cash with the main operating account
Correct answer: Maintaining a small cash fund for minor incidental expenses with a log of transactions
Petty cash is a small fund for minor expenses, and all disbursements must be documented with receipts and a transaction log for audit purposes.
Question 5: When a medical office performs a bank reconciliation, what is the primary goal?
- To increase the practice's credit limit
- To ensure the practice's accounting records match the bank statement balance (Correct answer)
- To calculate payroll taxes owed
- To determine the cost of medical supplies ordered
Correct answer: To ensure the practice's accounting records match the bank statement balance
Bank reconciliation confirms that the internal accounting records and the bank statement agree, identifying any discrepancies or errors.
Question 6: Which type of budget forecasts expected revenues and expenses for a medical practice over the coming year?
- Capital budget
- Operating budget (Correct answer)
- Cash flow budget
- Zero-based budget
Correct answer: Operating budget
An operating budget projects day-to-day revenues and expenses, such as staffing, supplies, and utilities, for the upcoming fiscal year.
CMAS CMAS Financial Management & Accounting 1
Which financial statement summarizes a medical practice's revenues, expenses, and net income over a specific period?