Which Entry Would Be the Correct Entry to Record That

question 58

Multiple Choice

Which entry would be the correct entry to record that a hospital has provided patient services for $200,000,of which 25% will be billed to a third party?

• A)debit Accounts Receivable-Patients $200,000,credit Patient Service Revenue $200,000.
• B)debit Accounts Receivable-Patients $150,000,debit Accounts Receivable-Third Party $50,000,credit Patient Service Revenue $200,000.
• C)debit Accounts Receivable-Patients $50,000,debit Accounts Receivable-Third Party $150,000,credit Patient Service Revenue $200,000.
• D)debit Accounts Receivable-Patients $200,000,credit Patient Service Revenue $50,000,credit Patient Service Revenue $150,000.
• E)debit Patient Service Revenue $200,000,credit Accounts Receivable-Patients $150,000,credit Accounts Receivable-Third Party $50,000.

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Definitions:

Net Income

The residual income of a company after total revenue has been diminished by all costs and taxes.

Cash Flows

The net amount of cash being transferred into and out of a business, especially considered important for assessing liquidity, flexibility, and overall financial health.

Indirect Method

An approach to preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash from operating activities.

Operating Activities

The section of a business's cash flow statement that accounts for its core business operations' cash inflows and outflows, involving receipts from sales, payments to suppliers, and payroll.