#1
Which of the following financial ratios measures a dental practice's ability to meet short-term obligations?
Current Ratio
ExplanationMeasures liquidity by comparing current assets to current liabilities.
#2
In financial management for dental practices, what does the term 'accounts receivable' refer to?
Money owed by patients for services already provided
ExplanationAmounts due from patients for treatments rendered.
#3
Which of the following is an example of an operating expense in a dental practice?
Payment of rent for the office space
ExplanationCosts incurred in the day-to-day operations of the practice.
#4
What is the primary purpose of financial planning in a dental practice?
To ensure the practice has enough funds to cover expenses and meet its goals
ExplanationSecuring resources to fulfill objectives and obligations.
#5
What does the term 'working capital' refer to in financial management for dental practices?
The capital available for daily operations
ExplanationFunds used for day-to-day activities.
#6
What is the primary goal of financial management in a dental practice?
Maximizing profits
ExplanationOptimizing earnings while managing resources efficiently.
#7
Which financial statement provides a snapshot of a dental practice's financial position at a specific point in time?
Balance Sheet
ExplanationSummarizes assets, liabilities, and equity at a given time.
#8
What does the term 'capital budgeting' refer to in financial management for dental practices?
Budgeting for long-term investments in assets
ExplanationPlanning for significant expenditures on assets with long-term benefits.
#9
What role does a budget play in financial management for dental practices?
It allows for planning and controlling financial resources.
ExplanationFacilitates allocation and monitoring of financial resources.
#10
Which financial analysis technique evaluates the profitability of a dental practice by comparing its revenue to its expenses?
Break-even analysis
ExplanationDetermines the point where revenue equals total costs.
#11
What does the concept of 'time value of money' refer to in financial management?
The principle that money invested today is worth more than the same amount in the future
ExplanationRecognizes the greater value of money today due to its earning potential.