RHIA Finance Practice Questions (50 Flashcards)

Correct: B. Monthly Software-as-a-Service (SaaS) subscriptions are typically operational expenses (OPEX) because they are recurring and do not result in asset ownership. Capital expenses (CAPEX) involve assets with a useful life >1 year and costs exceeding a specific threshold (e.g., $5,000). A, C, and D involve long-term assets or improvements that are capitalized. AHIMA Strategy: Note that the shift from perpetual licenses to SaaS has moved many HIM technology costs from Capital to Operational budgets.

The method is Incremental Budgeting (also known as line-item or historical budgeting). Rationale: Incremental budgeting uses the previous period's actual or budgeted results as the starting point, with adjustments (increments) made for the new period. Key Exam Points: 1. Pros: Simple to implement, stable, and time-efficient. 2. Cons: It encourages "budgetary slack" (padding) and assumes all current activities are still necessary and efficient. 3. AHIMA Focus: Often used in stable environments where departmental operations do not change significantly year-over-year. Watch for distractors like "Fixed Budget," which refers to a budget that doesn't change with volume, rather than the calculation method.

Variance = (Actual - Budget) / Budget. ($12,500 - $10,000) / $10,000 = 0.25 or 25%. Since actual expenses exceeded the budget, it is a 25% Unfavorable (U) variance. AHIMA Tip: Always interpret favorable based on context; for expenses, spending less is favorable, but for revenue, earning more is favorable. Common distractor: Dividing by the actual instead of the budget.

ROI = [(Total Benefits - Total Costs) / Total Costs] x 100. Total Benefits over 4 years = $45,000 * 4 = $180,000. Total Costs = $150,000. Calculation: [($180,000 - $150,000) / $150,000] = 0.20 or 20%. Exam Tip: AHIMA often tests ROI over a specific multi-year lifecycle. Ensure you multiply the annual savings by the number of years before subtracting the initial investment. ROI expresses the profitability of an investment as a percentage.

ROI is calculated as [(Total Benefits - Total Costs) / Total Costs] x 100. In this scenario: ($260,000 - $200,000) / $200,000 = 0.30 or 30%. Exam Strategy: AHIMA emphasizes that ROI is a performance measure used to evaluate the efficiency of an investment. Watch for distractors that use Net Profit instead of Net Savings in HIM contexts. ROI over 0% indicates the project pays for itself, but organizations usually have a hurdle rate (minimum acceptable ROI) to approve capital expenditures.