Financial Management & Budgeting Flashcards
7 cards from real ALF practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Management & Budgeting flashcards as text
A facility discovers a billing error that overcharged a resident for three months. The financially and ethically correct action is to:
Answer: Promptly disclose the error and refund or credit the overcharge
Billing errors must be disclosed and corrected promptly through refund or credit to maintain compliance and trust.
Which action most directly improves an ALF's days-in-accounts-receivable metric?
Answer: Billing promptly and following up on past-due accounts consistently
Timely billing and consistent collections follow-up shorten the time between service delivery and cash receipt.
An administrator is evaluating whether to add a memory care wing. Which financial tool best compares the long-term costs and revenues of this investment?
Answer: A capital investment analysis such as net present value or return on investment
Capital investment analysis tools like NPV and ROI evaluate whether long-term projects will generate returns exceeding their costs.
A facility's contract states rates may increase with 30 days' written notice. Raising rates without providing this notice creates what type of risk?
Answer: Legal and financial risk from breach of the residency agreement
Ignoring contractual notice requirements exposes the facility to breach-of-contract claims, refunds, and regulatory complaints.
Which expense is most appropriately classified as a variable cost in an ALF operating budget?
Answer: Food and dietary supplies
Food costs rise and fall with the number of residents served, making them variable, unlike salaries, taxes, and debt service.
During a state survey, the facility must demonstrate financial capacity to operate. Which document set best evidences this?
Answer: Current financial statements, budgets, and proof of insurance and reserves
Surveyors and licensing agencies assess financial viability through financial statements, budgets, insurance, and reserve documentation.
The facility's annual budget projects a 3% surplus, but mid-year a minimum wage increase takes effect. What should the administrator do first?
Answer: Revise the budget forecast to reflect the new labor costs and assess the impact on the surplus
Material mid-year cost changes require reforecasting so the administrator can plan measured responses rather than reactive cuts.