Chapter 30 Accounts Payable and Accounting Procedures

Accounts payable refers to the:

a. monthly total of wages paid to employees.

b. medical bills that are sent to insurance carriers.

c. total amount of money the practice owes to vendors.

d. amount of money that is owed to the practice from insurance companies.

total amount of money the practice owes to vendors.

Managerial accounting is also known as:

a. profit accounting.

b. medical accounting.

c. practice management accounting.

d. cost accounting.

cost accounting

________________ is the obligation or the promise that a medical office owes to its creditors for buying goods or services.

Accounts payable

Check My Work

If the assets of a medical practice add up to $20,000, and its liabilities add up to $5,000, what is the net worth of the medical practice?

a. $15,000

b. $1,500

c. $25,000

d. $4,000

$15,000

If the current A/R balance is $100,000, and the average monthly gross production is $20,000, what is the A/R ratio?

a. 0.5

b. 8.0

c. 5.0

d. 0.2

5.0

The __________ is one of the two most common financial statements?

income statement

The steps in calculating a cost benefit analysis include identifying costs, identifying benefits, and:

a. removing any write offs.

b. researching the company's assets.

c. creating a balance sheet.

d. comparing costs and benefits

comparing costs and benefits

A(n) ____________ is a document that includes itemization of goods and purchases or services provided together with the charges and terms of the agreement.

invoice

________________ is/are the acquired material, property, or labor in exchange for money.

expenditure

The net collection ratio is calculated by:

a. dividing the total payments for a specific period of time by the total charges, with the write-offs deducted from the total charges.

b. dividing the total payments for a specific period of time by the total charges, without figuring in any write-offs.

c. dividing the total charges by the total payments for a specific period.

d. multiplying the total charges by the total payments for a specific period.

dividing the total payments for a specific period of time by the total charges, with the write-offs deducted from the total charges.

After write-offs are taken, net collection rates should be:

a. no less than 50 percent.

b. no more than 10 percent.

c. between 50 and 90 percent.

d. between 90 and 100 percent.

between 90 and 100 percent.

If the total expenses for a medical practice add up to $150,000, and the total number of procedures adds up to 300, what is the cost ratio?

a. 120,000

b. 5,000

c. 450,000

d. 500

500

A(n) ___________________ demonstrates the profit and expenses for a given month and includes year-to-date information for a given year.

income statement

The part of an invoice that states "Payment should be made within 30 days by check or money transfer, through online banking, from the date of this invoice" is known as the:

a. payment terms.

b. reference number.

c. client details.

d. fees recorded.

payment terms

Net worth

Equity

Balance Sheet

a statement of financial position, reveals a company's asset's, liabilities, and owner's equity

Trial Balance

Prepared at the end of an accounting period, typically monthly, quarterly, and annually

Income Statement

The most commonly generated year end report

Expenditure

acquired material, property, or labor in exchange for money

Depleted

consumed, emptied, exhausted

Equity

Net worth

invoice

a document that includes itemization of goods and purchases or services provided together with the charges and terms of the agreement.

cost ratio

a formula that demonstrates the cost of a specific procedure or service

net collection ratio

This is calculated by taking the total payments for a specific period of time divided by the total charges, with the write offs deducted from the total charges

Accounting

Involves the entire process of identifying, recording, and communicating economic events

vouncher

A document that serves as proof that terms of transaction have been met

Assets

The money and items of value in a business

Accounting Formula

Assets - liabilities= net worth