Federal Nursing Home Administrator Practice Exam

What does the financial statement summarize?

1. Only revenues for a specific time

2. All transactions made and their effect on finances

3. The facility's total assets

4. Monthly expense reports only

The correct answer is: All transactions made and their effect on finances

The financial statement provides a comprehensive summary of all transactions made by the organization and their impact on the finances over a specific period. It includes revenues, expenses, and any other financial activities, which together give a complete overview of the financial health of the facility. This holistic view is crucial for stakeholders to assess performance, make informed decisions, and plan for future financial management. Focusing only on revenues would not provide a complete picture of the financial situation, as it would ignore costs and expenditures that are equally important. Similarly, simply stating the total assets does not give insight into how those assets are generated or utilized. Monthly expense reports alone would not encompass all financial activities, leaving out critical information about revenues and other financial transactions. Thus, a financial statement summarizing all transactions offers a full and accurate reflection of the financial state of the facility.