When Insurance Carriers Do Not Pay Claims in a Timely

question 54

Multiple Choice

When insurance carriers do not pay claims in a timely manner, what effect does this have on the medical practice?

• A) Increased cash flow
• B) Decreased cash flow
• C) Decreased accounts receivable
• D) Decreased copayments

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Definitions:

Period Cost

Expenses that are not tied directly to product production and are expensed in the period they are incurred.

Absorption Costing

A method of accounting which integrates all costs related to manufacturing, from direct materials and labor to variable and fixed overhead, into the product’s pricing.

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overheads—in the cost of a product.

Variable Costing Income Statement

An income statement format that deducts only variable costs from sales to compute contribution margin, followed by the deduction of fixed costs to determine net income.