After It Prepares Its Financial Statements,a Hospital Has Historically Received

question 5

Multiple Choice

After it prepares its financial statements,a hospital has historically received malpractice claims for events occurring before the balance sheet date.How should the hospital handle these incurred but not reported (IBNR) claims its financial statements?

• A)take no action until it actually receives claims.
• B)disclose,in the notes to its financial statements,that it historically receives IBNR claims;state that no estimate can be made of probable loss because no claims have been filed
• C)estimate,based on past experience,the amount of probable loss on IBNR claims;report this amount in the notes
• D)estimate,based on past experience,the amount of probable loss on IBNR claims;report this amount as an expense and a liability

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Definitions:

Potency Bias

The tendency to overestimate one's ability to control events or outcomes, often leading to overconfidence.

Social Discounting

A phenomenon in which individuals devalue rewards or benefits that are to be received by others, placing less value on outcomes affecting people who are socially distant.

Personal Accomplishment

A sense of achievement and fulfillment resulting from one's own efforts and successes.

Emotional Exhaustion

A state of feeling emotionally drained and depleted as a result of accumulated stress from personal or work life.