CMM Financial Management 3

Question 1

Which financial statement shows a practice's assets, liabilities, and equity at a specific point in time?

Accepted Answer

Balance sheet

Answer

The balance sheet (statement of financial position) provides a snapshot of what a practice owns (assets), owes (liabilities), and the owner's equity on a given date.

Question 2

A medical practice has total monthly collections of $180,000 and total monthly expenses of $144,000. What is the overhead percentage?

Accepted Answer

80%

Answer

Overhead percentage = Expenses / Collections × 100 = $144,000 / $180,000 × 100 = 80%.

Question 3

Which cost behavior remains constant in total regardless of changes in patient volume within a relevant range?

Accepted Answer

Fixed cost

Answer

Fixed costs, such as rent and salaried staff, do not change in total as patient volume increases or decreases within a relevant range.

Question 4

What does a negative net present value (NPV) for a capital investment indicate?

Accepted Answer

The investment is expected to destroy value

Answer

A negative NPV means the present value of expected cash inflows is less than the initial investment, indicating the project would reduce the practice's value.

Question 5

Which payer mix change would MOST likely improve a medical practice's average reimbursement per visit?

Accepted Answer

Increase in commercial insurance patients

Answer

Commercial insurers typically reimburse at higher rates than government payers, so a greater proportion of commercial patients raises average reimbursement.

(CMM) Certified Medical Manager Practice Test

(CMM) Certified Medical Manager Practice Test

CMM Financial Management 3