Financial Management and Budgeting Flashcards

An ALF administrator notices that actual food service costs exceeded the budgeted amount by 12% for the quarter. What is the most appropriate first step?

Answer: Perform a variance analysis to identify the cause of the overage

Variance analysis identifies whether the overage stems from census changes, price increases, or waste before corrective action is taken.

Which budgeting method requires every expense line to be justified from scratch each budget cycle rather than adjusting prior-year figures?

Answer: Zero-based budgeting

Zero-based budgeting starts each line item at zero and requires justification for all spending regardless of prior budgets.

In an assisted living facility, resident rent and care fees are typically classified on the income statement as what?

Answer: Operating revenue

Fees for housing and care services are the facility's core operating revenue.

A facility's accounts receivable aging report shows a growing balance in the 90+ day column. What does this most directly indicate?

Answer: Collections problems that threaten cash flow

Receivables aging past 90 days signal collection difficulties that reduce available cash.

Which of the following is a fixed cost for an assisted living facility?

Answer: Property insurance premiums

Property insurance stays constant regardless of occupancy, unlike food, supplies, or overtime that vary with census and care needs.

An administrator preparing a capital budget would include which of the following items?

Answer: Replacement of the facility's HVAC system

Capital budgets cover major long-lived asset purchases like HVAC systems, not routine operating expenses.

A facility with 100 units has 88 occupied units. What is its occupancy rate?

Answer: 88%

Occupancy rate equals occupied units divided by total units, so 88/100 = 88%.