Nurse Executive Test Nurse Executive Test Financial Management & Budgeting 1 — Questions and Answers
Question 1: What type of budget adjusts projected expenses based on actual patient volume and acuity?
- Zero-based budget
- Flexible budget (Correct answer)
- Fixed budget
- Capital budget
Correct answer: Flexible budget
A flexible budget recalculates expected costs as patient volume and acuity change, providing a more accurate financial picture.
Question 2: Which financial metric measures the total cost of delivering nursing care divided by the number of patient days?
- Cost per discharge
- Nursing hours per patient day (NHPPD)
- Full-time equivalent (FTE) ratio
- Cost per patient day (CPPD) (Correct answer)
Correct answer: Cost per patient day (CPPD)
Cost per patient day calculates total nursing expenses per patient day to benchmark efficiency across units or time periods.
Question 3: A nurse executive notices a significant variance between budgeted and actual staffing costs. What should be done FIRST?
- Immediately cut staff hours to close the gap
- Analyze the root cause of the variance (Correct answer)
- Request emergency additional budget funds
- Ignore the variance if it is under 5%
Correct answer: Analyze the root cause of the variance
Identifying the root cause of variance enables informed corrective action rather than reactive decisions that may worsen the situation.
Question 4: What is a capital expenditure in healthcare financial management?
- Recurring operational expenses such as salaries
- Long-term investments in equipment or infrastructure with multi-year value (Correct answer)
- Short-term supply and medication costs
- Daily patient revenue collections
Correct answer: Long-term investments in equipment or infrastructure with multi-year value
Capital expenditures represent major investments such as medical equipment or facility renovations that provide value over multiple years.
Question 5: Which financial statement shows an organization's financial position at a specific point in time?
- Income statement
- Cash flow statement
- Balance sheet (Correct answer)
- Budget variance report
Correct answer: Balance sheet
The balance sheet presents assets, liabilities, and equity, reflecting the organization's financial position at a single given date.
Question 6: What does ROI stand for in healthcare financial analysis, and what does it measure?
- Rate of Intervention — measures clinical efficiency
- Return on Investment — measures financial benefit relative to cost (Correct answer)
- Ratio of Improvement — measures quality gains
- Revenue of Institution — measures total income
Correct answer: Return on Investment — measures financial benefit relative to cost
ROI quantifies the financial benefit gained from an investment relative to its cost, helping prioritize resource allocation decisions.
Nurse Executive Test Nurse Executive Test Financial Management & Budgeting 1
What type of budget adjusts projected expenses based on actual patient volume and acuity?