Help me with this questions, Thanks The statement of cash ows for a government h

Question

Help me with this questions, Thanks

The statement of cash ows for a government hospital would differ from that of a not-for-prot hospital. The following represent a hospital’s inows and outows of cash:

• Patient service fees received

• Government grants for operating purposes

• Government grants for specic research programs

• Contribution restricted to construction of a new building

• Salaries and wages

• Supplies

• Interest paid on long-term debt

• Interest paid on short-term operating debt

• Acquisition of capital assets

• Purchases of marketable securities

• Proceeds from sale of marketable securities

• Interest received from investments

• Dividends received from investments Proceeds of long-term debt to nance a new building

• Proceeds of short-term borrowings for operating purposes

1. Categorize the cash inows and outows as they would be reported in a statement of cash ows assuming that the hospital is government owned.

2. Do the same, this time assuming that the hospital is a not-for-prot.

3. Why did the GASB opt for a four-way classication? Whereas the FASB retained for not-for-prots the three-way classication developed for businesses?

Explanation / Answer

As per GASB

• Patient service fees received- Opration Activity(Inflow)

• Government grants for operating purposes-Operation Activity(Inflow)

• Government grants for specic research programs-Capital Financing Activities(Inflow)

• Contribution restricted to construction of a new building-Capital Financing Activity(Outflow)

• Salaries and wages-Operation Activity(Outflow)

• Supplies- operation Activity(Outflow)

• Interest paid on long-term debt           - Capital Financing Activity(Outflow)

• Interest paid on short-term operating debt-Opration Activity(Outflow)

• Acquisition of capital assets- Investment Activity                  (Outflow)

• Purchases of marketable securities-Investing Activity(outflow)

• Proceeds from sale of marketable securities-Investing Activity(Inflow)

• Interest received from investments-Investing Activity(Inflow)

• Dividends received from investments Proceeds of long-term debt to nance a new building-Investing Activity(Inflow)

• Proceeds of short-term borrowings for operating purposes-Operation Activity(Inflow)

FASB

• Patient service fees received- Opration Activity(Inflow)

• Government grants for operating purposes-Operation Activity(Inflow)

• Government grants for specic research programs- Financing Activities(Inflow)

• Contribution restricted to construction of a new building- Financing Activity(Outflow)

• Salaries and wages-Operation Activity(Outflow)

• Supplies- operation Activity(Outflow)

• Interest paid on long-term debt           - Finance Activity(Outflow)

• Interest paid on short-term operating debt-Fiancne Activity(Outflow)

• Acquisition of capital assets- Investment Activity                  (Outflow)

• Purchases of marketable securities-Investing Activity(outflow)

• Proceeds from sale of marketable securities-Investing Activity(Inflow)

• Interest received from investments-Investing Activity(Inflow)

• Dividends received from investments Proceeds of long-term debt to nance a new building-Investing Activity(Inflow)

• Proceeds of short-term borrowings for operating purposes-Finance Activity(Inflow)

The FASB requires the cash flow statement to report cash flows from operational, investment and financing activities. The GASB requires the cash flow statement to report cash flows from operational, investment, capital and related financing and noncapital financing activities. The effect is increased transparency and a more accurate representation of financing activities from private sector agencies.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.