A Hospital Originally Recorded All Patient Services It Provided as a $500,000

question 39

Multiple Choice

A hospital originally recorded all patient services it provided as a $500,000 debit to accounts receivable. Upon review the hospital determined that a contractual adjustment of $200,000 needs to be made, and estimated bad debts of $5,000 need to be recorded. In addition, at the time the receivable was recorded the hospital did not realize $100,000 should be considered charity services. Based on the information provided, what is the net amount of accounts receivable that the hospital would report on its financial statements?

• A) $495,000.
• B) $300,000.
• C) $200,000.
• D) $195,000.

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Definitions:

Not-for-Profit Entities

Organizations that operate for purposes other than making a profit, often focusing on social, educational, or charitable endeavors.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.

Responsibility Center

A unit within an organization, such as a department or division, accountable for controlling costs, generating revenues, or managing assets.

Profit Center

A separate business unit or department within a company that is responsible for generating its own revenue and profit.