HAC Healthcare Supply Chain & Inventory Accounting Flashcards

A hospital's supply chain team negotiates a group purchasing organization (GPO) contract. From an accounting perspective, volume rebates received from the GPO should be treated as:

Answer: A reduction of the cost of purchased supplies

Under ASC 606 and GAAP guidance, vendor rebates reduce the cost of goods purchased rather than being recorded as separate revenue.

What is the primary financial risk of a hospital maintaining excessive safety stock for medical-surgical supplies?

Answer: Higher carrying costs and potential obsolescence expense

Excess safety stock ties up working capital, increases storage and insurance costs, and raises the risk that items expire or become obsolete before use.

Under ASC 330, a hospital discovers that 500 units of a specialty drug have a net realizable value of $10 per unit due to regulatory restrictions, versus a cost of $18 per unit. The required write-down is:

Answer: $4,000

The write-down is calculated as ($18 cost − $10 NRV) × 500 units = $8 per unit × 500 = $4,000.

A hospital processes a purchase order for 1,000 gloves at $0.15 each. Freight costs are $25. Under GAAP, what is the unit cost of gloves to be recorded in inventory?

Answer: $0.175

Freight-in costs are included in the cost of inventory; ($150 + $25) ÷ 1,000 units = $0.175 per glove.

In healthcare supply chain accounting, the '3-way match' process verifies agreement among which three documents before authorizing payment?

Answer: Purchase order, receiving report, and vendor invoice

The 3-way match is a core internal control that requires the purchase order, receiving report, and vendor invoice to agree on quantity, price, and description before payment is released.

A health system converts from FIFO to weighted average cost for pharmaceutical inventory. Under ASC 250, this change is treated as:

Answer: A change in accounting principle, requiring retrospective restatement

A change in inventory costing method is a change in accounting principle under ASC 250 and generally requires retrospective application and restatement of prior periods.