Question

What does it mean to retire a debt? Then calculate how to do the following (show your work): Hospital First has a fusion intervention center and they invested $106,944 for five years to retire a debt. Assuming the clinic can invest at 6% compounded annually, how much is the debt Hospital First needs to retire?

Distinguish the accounts receivable from the revenue cycle.

Explain the three laws that govern accounts receivable. Explain how you measure revenue cycle performance.

What are the different methods used to value inventory and what do they mean?

How do you evaluate effective inventory management performance?

Which of the 7 common methods of reimbursement to providers do you feel is best for providers today? Explain why you have chosen it over the other six.

Answer 1

ans1)

Debt retirement simply means paying off a debt completely. The investor is usually paid the par value, meaning the amount of money originally borrowed. However, there can be tax implications when a bond debt is retired.

ans2)

account receivables

revenue cycle

A business's accounts receivable represent the accounts of debtors who owe money to the business. Most companies record these debts when they render services to a third party, who agrees to pay for the services later. Companies with accounts receivable typically require debtors to sign contracts promising to pay the balance of their accounts on or before a predetermined date.

A company's revenue is its total income before expenses. Revenue includes payment for services the company performs and merchandise it sells. It also includes any interest or dividends the company earns from its investments. Companies use their total revenue to calculate profit during a given period by subtracting the period's expenses, such as the cost of goods sold and payroll, from the total revenue earned.

ans4) different methods are -

• First in, first out method. Under the FIFO method, you are assuming that items bought first are also used or sold first, which also means that the items still in stock are the newest ones. This policy closely matches the actual movement of inventory in most companies, and so is preferable simply from a theoretical perspective.
• Last in, first out method. Under the LIFO method, you are assuming that items bought last are sold first, which also means that the items still in stock are the oldest ones. This policy does not follow the natural flow of inventory in most companies; in fact, the method is banned under International Financial Reporting Standards.
• Weighted average method. Under the weighted average method, there is only one inventory layer, since the cost of any new inventory purchases are rolled into the cost of any existing inventory to derive a new weighted average cost, which in turn is adjusted again as more inventory is purchased.