Question

assume mercy hospital uses accrual accounting. which of the following statements is(are) most correct? patient service revenue is recognized when healthcare services are provided. salaries expense is recognized when payroll checks are written. patient service revenue is recognized when payment is received by the hospital from a patient's third-party payer. answers (a), (c), and (d) are correct.

Answer 1

In accrual accounting, patient service revenue is recognized when healthcare services are provided.

Step-by-step explanation:

In accrual accounting, patient service revenue is recognized when healthcare services are provided, regardless of whether or not payment has been received. This is because accrual accounting focuses on when revenue is earned, not when payment is received. So, statement (a) is correct.

On the other hand, salaries expense is recognized when payroll checks are written, regardless of when the services are provided. This is a form of cash-basis accounting, not accrual accounting. Therefore, statement (b) is not correct.

Lastly, patient service revenue is recognized when payment is received by the hospital from a patient's third-party payer. This is incorrect because patient service revenue is recognized when healthcare services are provided, not when payment is received. Therefore, statement (c) is not correct either.

Overall, the correct statement is (a): patient service revenue is recognized when healthcare services are provided