Part 451 - Definitions

Effective Date: 
Tuesday, December 23, 1980
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Statutory Authority: 
Public Health Law, Sections 2803(2), 2803-b, 2805-e, 2808

Section 451.0 - General

Section 451.0 General. For the purposes of this Article, the following terms shall have the following meanings:

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Section 451.1 - Accelerated depreciation

451.1 Accelerated depreciation. Method of depreciation which generates a greater amount of expense in the earlier life of an asset, and less expense in the later years, than the straight-line method. The purposes for adopting such a method would be:

(a) operation of plant or equipment at more than normal speed, use or capacity; (b) a useful or economic life materially less than physical life;

(c) an excessive cost being written off during what is estimated to be the high-price period; and

(d) tax advantages arising from the use of declining-balance and sum-of-the-years methods.
 

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Section 451.2 - Accommodation fee

451.2 Accommodation fee. An advance payment or transfer of a specified amount of funds or property by, or on behalf of, an aged person to a facility as full or partial payment for the promise to provide accommodations for the remainder of the person's life.
 

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Section 451.3 - Accounting

451.3 Accounting. The art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof.

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Section 451.4 - Account control

451.4 Account control. The administrative procedures employed in maintaining the accuracy and propriety of transactions and the bookkeeping record thereof.
 

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Section 451.5 - Accounting manual

451.5 Accounting manual. A handbook of accounting policies, standards, and practices governing the accounts of a business enterprise or other entity; it includes the classification of accounts.
 

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Section 451.6 - Accounting period

451.6 Accounting period. The period of time for which an operating statement is customarily prepared (normally 12 months).
 

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Section 451.7 - Accounting policy

451.7 Accounting policy. The general principles and procedures under which the accounts of an organization are maintained and reported; any one such principle or procedure.
 

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Section 451.8 - Accrual basis

451.8 Accrual basis. The recognition of revenue when earned and expenses when incurred, together with acquired assets or related liabilities, without regard to the date of receipt or payment of cash.
 

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Section 451.9 - Accumulated income (or earnings or profit)

451.9 Accumulated income (or earnings or profit). Net income retained and not paid out in dividends or dissipated by subsequent losses; earned surplus or retained earnings.
 

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Section 451.10 - Activity

451.10 Activity. (a) The work, or one of several lines of work, carried on within any organization or organizational subdivision.

(b) The whole of the work carried on by any organization or individual.
 

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Section 451.11 - Actual cost

451.11 Actual cost. (a) Acquisition costs, net of discounts and allowances, but including transportation and storage (often averaged for internal transfer or inventory purposes).

(b) Payroll costs or other production costs.
 

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Section 451.12 - Actual time method

451.12 Actual time method. Depreciation expense based on the number of months the assets is owned in both the year of acquisition and the last year of an asset's life, as opposed to using a half year's depreciation in the year of acquisition and zero in the last year.
 

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Section 451.13 - Actuarial basis

451.13 Actuarial basis. A basis compatible with principles followed by actuaries; said of computations involving compound interest, retirement and mortality estimates, and the like.
 

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Section 451.14 - Additional (paid-in) capital

451.14 Additional (paid-in) capital. (a) Contributions of corporate stockholders credited to accounts other than capital stock.

(b) Sources:

(1) an excess over par or stated value received from the sale or exchange of capital stock;

(2) an excess of par or stated value of capital stock reacquired over the amount paid therefor; or

(3) an excess from recapitalization, often displayed on the balance sheet as a separate item or in combination with par or stated value and designated paid-in capital.

(c) known also as paid-in surplus.
 

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Section 451.15 - Adjusting (journal) entry

451.15 Adjusting (journal) entry. (a) The record made of an accounting transaction giving effect to the correction of an error, an accrual, a write-off, a provision for bad debts or depreciation, or the like.

(b) Auditing. Any change in the accounts required by an auditor, expressed in the form of a simple or compound journal entry.
 

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Section 451.16 - Administrative accounting

451.16 Administrative accounting. That portion of the accounting process generally associated with management: for example, the functions of the controller, internal auditing, and decisions as to prorations, valuations, reserves, charge-offs and reporting.
 

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Section 451.17 - Administrative expense

451.17 Administrative expense. A classification of expense incurred in the general directing of an enterprise as a whole, as contrasted with expense of a more specific function, such as nursing services or dietary, but not including income deductions. Items included under this heading vary with the nature of the business, but usually include salaries of top officers and other general office expense.
 

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Section 451.18 - Advance

451.18 Advance. (a) Payment of cash or the transfer of goods for which an accounting must be rendered by the recipient at some later date.

(b) A payment of a contract before its completion.

(c) The payment of wages, salaries or commissions before they have been earned.
 

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Section 451.19 - Age

451.19 Age. The number of years or other time periods an asset or asset group has remained in service at a given date.
 

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Section 451.20 - AICPA

451.20 AICPA. American Institute of Certified Public Accountants.
 

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Section 451.21 - Allocate

451.21 Allocate. (a) To charge an item or group of items of revenue or cost to one or more objects, activities, processes, operations or products, in accordance with cost responsibilities, benefits received, or other readily identifiable measure of application or consumption.

(b) To distribute the total cost of a lump-sum purchase over the items purchased or departments affected.

(c) To spread a cost systematically over two or more time periods.
 

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Section 451.22 - Allowance

451.22 Allowance. The difference between gross revenue from services rendered and amounts received (or to be received) from patients or third-party payors. Allowances are to be distinguished from uncollectible accounts resulting from credit losses.
 

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Section 451.23 - Allowable costs

451.23 Allowable costs. Documented costs which are necessary for the day-to-day operation of a provider, are directly or indirectly related to patient care, and are not expressly declared nonallowable by Federal or State regulations.
 

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Section 451.24 - Amortization

451.24 Amortization. The systematic distribution of the cost or other basis of a tangible or intangible asset over the estimated useful life of the asset.
 

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Section 451.25 - Apportionment

451.25 Apportionment. The distribution of a cost over several periods of time in proportion to anticipated benefits.
 

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Section 451.26 - Appreciation

451.26 Appreciation. Increase in value of property; the excess of the present value of property over book value.
 

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Section 451.27 - Article 2-A facility

451.27 Article 2-A facility. A residential health care facility organized under article 28-A of the Public Health Law.
 

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Section 451.28 - Assets

451.28 Assets. Economic resources of an enterprise which are recognized and measured in conformity with generally accepted accounting principles.
 

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Section 451.29 - Audit

451.29 Audit. (a) The examination of contracts, orders and other original documents for the purpose of substantiating individual transactions before their settlement.

(b) Any systematic investigation or appraisal of procedures or operations for the purpose of determining conformity with prescribed criteria; the work performed by an internal auditor.

(c) Auditing. An exploratory, critical review, by a public accountant, of the underlying internal controls and accounting records of a business enterprise or other economic unit, precedent to the expression by him of an opinion of the propriety ("fairness") of its financial statements.
 

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Section 451.30 - Available beds

451.30 Available beds. Health facility beds which are maintained and staffed for the provision of patient care.
 

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Section 451.31 - Average daily inpatient census

451.31 Average daily inpatient census. Average number of inpatients (based on the daily inpatient census) present each day for a given period of time.
 

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Section 451.32 - Average length of stay

451.32 Average length of stay. The average number of days of service rendered to each inpatient discharged during a given period.
 

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Section 451.33 - Average life

451.33 Average life. The estimated useful-life expectancy of a group of assets subject to depreciation.
 

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Section 451.34 - Bad debts

451.34 Bad debts. Amounts considered to be uncollectible from accounts and notes receivable which were created or acquired in providing services to patients.
 

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Section 451.35 - Balance

451.35 Balance. (a) The difference between the total debits and the total credits of an account or the total of an account containing only debits or credits.

(b) The equality of the total debit balances and the total credit balances of the accounts in a ledger.

(c) Agreement of the total of the account balances in a subsidiary ledger with its general ledger control.
 

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Section 451.36 - Balance sheet

451.36 Balance sheet. A statement of financial position of any economic unit, or component thereof, reporting as at a given moment of time its assets (at cost, depreciated cost, or other indicated value), its liabilities, and its ownership equities recorded under an accounting system.
 

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Section 451.37 - Bed turnover rate

451.37 Bed turnover rate. The number of times a health facility bed, on the average, changes occupants during a given period of time.
 

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Section 451.38 - Benefit

451.38 Benefit. The service or satisfaction yielded by an expenditure.
 

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Section 451.39 - Betterment

451.39 Betterment. An expenditure having the effect of extending the useful life of an existing fixed asset, increasing its normal rate of output, lowering its operating cost, increasing rather than merely maintaining efficiency, or otherwise adding to the worth of benefits it can yield.
 

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Section 451.40 - Board-designated funds

451.40 Board-designated funds. Unrestricted funds set aside by the governing board for specific purposes or projects.
 

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Section 451.41 - Bond

451.41 Bond. (a) A certificate of indebtedness, in writing and often under seal.

(b) An obligation in writing, binding one or more parties as surety for another.
 

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Section 451.42 - Book inventory

451.42 Book inventory. (a) An inventory which is not the result of actual stocktaking but of adding the units and the cost of incoming goods to previous inventory figures and deducting the units and cost of outgoing goods.

(b) The balances of materials or products on hand in quantities, dollars, or both, appealing in perpetual-inventory accounts.
 

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Section 451.43 - Book of original entry

451.43 Book of original entry. A record book, recognized by law or custom, in which transactions are successively recorded, and which is the source of posting to ledgers; a journal. Books of original entry include general and special journals, such as cashbooks and registers of sales and purchases.
 

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Section 451.44 - Book value (or cost)

451.44 Book value (or cost). (a) The net amount at which an asset or asset group appears on the books of account, as distinguished from its market value or some intrinsic value.

(b) The face amount of a liability less any unamortized discount and expense.

(c) As applied to capital stock:

(1) the book value of the net assets;

(2) in a corporation, the book value of net assets divided by the number of outstanding shares of capital stock.
 

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Section 451.45 - Calendar year

451.45 Calendar year. A 12-month period beginning January 1st and ending December 31st of the same year.
 

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Section 451.46 - Capital expenditures

451.46 Capital expenditures. An expenditure intended to benefit future periods. in contrast to a revenue expenditure, which benefits a current period; an addition to a capital asset. The term is generally restricted to expenditures that add fixed-asset units or that have the effect of increasing the capacity, efficiency, life span or economy of operation of an existing fixed asset.
 

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Section 451.47 - Capitalization

451.47 Capitalization. The process of setting up expenditures as assets and amortizing or depreciating these assets over time.
 

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Section 451.48 - Cash basis

451.48 Cash basis. Recording cash as received, regardless of when it is earned, and recording expenses when they are paid, regardless of when they are incurred.
 

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Section 451.49 - Certificate of deposit

451.49 Certificate of deposit. (a) A formal instrument, frequently negotiable or transferable, issued by a bank as evidence of indebtedness and arising from a deposit of cash subject to withdrawal under the specific terms of the instrument:

(1) demand certificates, payable upon presentation, seldom bearing interest;

(2) time certificates, payable at a fixed or determinable future date, usually bearing interest at a specified rate.

(b) A formal certificate, usually printed or engraved, ordinarily negotiable or transferable, and issued by a depository or agent against the deposit of bonds or stock of a corporation under the terms of a reorganization plan or other agreement.
 

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Section 451.50 - Chain Organization

451.50 Chain Organization. A health care or other organization consisting of a group of two or more facilities which are owned, leased or, through any other device, controlled by one business entity.
 

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Section 451.51 - Change of ownership

451.51 Change of ownership. A change in the entity which has ultimate legal responsibility for the operation of a provider and thus for decisions and for liabilities arising in the course of its operation.
 

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Section 451.52 - Charity allowances

451.52 Charity allowances. Reductions in charges made by the provider of services because of the indigence or medical indigence of the patient.
 

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Section 451.53 - Chart of accounts

451.53 Chart of accounts. A systematically arranged list of accounts applicable to a specific concern, giving account names and numbers. A chart of accounts, accompanied by descriptions of their use and of the general operation of the books of account, becomes a classification or manual of accounts.
 

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Section 451.54 - Classification of accounts

451.54 Classification of accounts. A list of accounts, systematically grouped (chart of accounts), suitable for a particular organization, with descriptions setting forth the meaning, function and content of each account and the relation of one to another.
 

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Section 451.55 - Clearing account

451.55 Clearing account. (a) A primary account containing costs that are to be transferred or allocated to other accounts.

(b) An intermediate account to which is transferred a group of costs or revenues, or a group of accounts containing costs or revenues, and from which a distribution of the total is made to other accounts.
 

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Section 451.56 - Common ownership

451.56 Common ownership. An individual or individuals with a controlling interest in both the residential health care facility and an organization that does business with the facility.
 

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Section 451.57 - Consistency

451.57 Consistency. Continued uniformity, during a period or from one period to another, in methods of accounting and use of generally accepted accounting principles (mainly in valuation bases and methods of accrual, as reflected in the financial statements of a business enterprise or other accounting or economic unit).
 

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Section 451.58 - Consultant

451.58 Consultant. A firm or person (normally not an employee), with demonstrated expertise in a given field, who provides technical advice in that field in order to improve the necessary day-to-day operation of a facility.
 

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Section 451.59 - Contractor

451.59 Contractor. An entity which contracts with the department to deliver care to medical-recipient patients.
 

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Section 451.60 - Contractual adjustment

451.60 Contractual adjustment. The difference between billings at established charges and amounts received or due from third-party payors under contract agreements--similar to a trade discount.
 

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Section 451.61 - Contributed capital

451.61 Contributed capital. (a) The payments in cash or property made to a corporation by its stockholders:

(1) in exchange for capital stock;

(2) in response to an assessment on the capital stock; or

(3) as a gift.

(b) Paid-In capital.
 

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Section 451.62 - Contributed services

451.62 Contributed services. See donated services.
 

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Section 451.63 - Control

451.63 Control. The process by which the activities of an organization are conformed to a desired plan of action and the plan is conformed to the organization's activities.
 

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Section 451.64 - Control (or controlling) account

451.64 Control (or controlling) account. An account containing primarily totals of one or more types of transactions, the detail of which appears in a subsidiary ledger or its equivalent. Its balance equals the sum of the balances of the detail accounts.
 

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Section 451.65 - Cost

451.65 Cost. An expenditure or outlay of cash, other property, capital stock or services, or the incurring of a liability therefor, identified with goods or services acquired or with any loss incurred, and measured by the amount of cash paid or payable or the market value of other property, capital stock or services given in exchange or, in other situations, any commonly accepted basis of valuation. Implicit in the concept of cost is the accrual basis of accounting.
 

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Section 451.66 - Cost allocation

451.66 Cost allocation. The apportionment or allocation of the costs of nonrevenue-producing cost centers to each other, and to revenue-producing centers on the basis of the statistical data that measure the amount of service rendered by each center to other centers. The purpose of cost allocation is to determine the total of full costs of operating each revenue-producing center of a health facility.
 

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Section 451.67 - Cost centers

451.67 Cost centers. Categories into which related costs are grouped for purposes of cost reimbursement reporting and rate determination.
 

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Section 451.68 - Cost-finding

451.68 Cost-finding. The process of recasting the data derived from the accounts kept by a provider to ascertain the cost of the various types of services rendered.
 

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Section 451.69 - Courtesy allowances

451.69 Courtesy allowances. A reduction in charges in the form of all allowances to physicians, clergy and others for services received from the provider.
 

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Section 451.70 - Current assets

451.70 Current assets. Unrestricted cash, or other assets held for conversion within a relatively short period into cash or other readily convertible asset, or currently useful goods or services. Usually the period is one year or less; however, in some enterprises the period may be extended to the length of the operating cycle, which may be more than a year. The five customary subdivisions of current assets are cash, temporary investments, receivables, inventory, and prepaid expenses.
 

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Section 451.71 - Current liability

451.71 Current liability. A short-term debt, regardless of its source, including any liability accrued and deferred and unearned revenue that is to be paid out of current assets or is to be transferred to income within a relatively short period, usually one year or less, or a period greater than a year but within the business cycle of an enterprise. The currently maturing portion of long-term debt is thus classified.
 

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Section 451.72 - Daily inpatient census

451.72 Daily inpatient census. The number of inpatients present at the census-taking time each day, plus any inpatients who were both admitted and discharged after the census-taking time the previous day. Generally, the inpatient census is taken each midnight. However, a facility may designate and consistently use any other specified hour for census taking.
 

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Section 451.73 - Date of acquisition

451.73 Date of acquisition. The effective purchase date of an asset. Usually, this is the date title is acquired or the burdens of ownership are assumed and the asset is in possession.
 

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Section 451.74 - Deductible

451.74 Deductible. Under the Medicare program, that portion of covered hospital and medical charges which an insured person must pay before his policy benefits begin. Proposed as a mechanism to discourage over-utilization or to avoid processing small claims.
 

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Section 451.75 - Deferral (or deferment)

451.75 Deferral (or deferment). The accounting treatment accorded the receipt or accrual of revenue before it is earned, or the incurrence of an expenditure before the benefits therefrom are received.
 

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Section 451.76 - Deferred charges

451.76 Deferred charges. The portion of an expenditure which has been made which will not be charged against revenue within 12 months following the date of the statement of operations.
 

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Section 451.77 - Definition

451.77 Definition. A statement that sets forth and delimits the meaning of a word, phrase, or other symbolic expression, as used in a given discourse or context.
 

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Section 451.78 - Depreciation

451.78 Depreciation. The systematic distribution of the cost or other basis of depreciable asset over its estimated useful life.
 

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Section 451.79 - Department

451.79 Department. A division within an organizational structure.
 

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Section 451.80 - Development period

451.80 Development period. The period from the inception of an article 28-A residential health care facility to the day preceding the permanent financial occupancy date.
 

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Section 451.81 - Direct cost

451.81 Direct cost. The cost of any good or service that contributes to and is readily ascribable to product or service output.
 

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Section 451.82 - Direct expense

451.82 Direct expense. See direct cost.
 

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Section 451.83 - Discount earned

451.83 Discount earned. A reduction in the purchase price of a good or service because of early payment.
 

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Section 451.84 - Distribution

451.84 Distribution. (a) Any payment to stockholders or owners of cash, property or shares, including any of the various forms of dividend; in noncorporate enterprise, a withdrawal.

(b) A spread of revenue or expenditure or of capital additions to various accounts; an allocation.

(c) Disposal of a product by sale.
 

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Section 451.85 - Donated services

451.85 Donated services. The estimated fair monetary value, based on a facility's compensation policies, of services related to patient care or in administrative positions essential to provisions of patient care performed by individuals who receive no monetary compensation or partial compensation for their services, but in which there is an employer-employee relationship between the individual and the facility. The term is usually applied to services rendered by members of religious orders, societies or similar groups to institutions operated by or affiliated with such groups.
 

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Section 451.86 - Donated supplies

451.86 Donated supplies. The estimated fair monetary value of contributed supplies.
 

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Section 451.87 - Earned

451.87 Earned. Realized or accrued as revenue through sales of goods, services performed, or the lapse of time.
 

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Section 451.88 - Employee benefit

451.88 Employee benefit. A pension provision, retirement allowance, insurance coverage, paid vacation, sick leave or holiday time off, or other cost representing a present or future return to an employee, which is neither deducted on a payroll nor paid or by the employee.
 

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Section 451.89 - Encumbrance (governmental accounting)

451.89 Encumbrance (governmental accounting). (a) An anticipated expenditure, evidenced by a contract or purchase order, or determined by administrative action.

(b) Commitment.

(c) Any lien or other liability attaching to real property.
 

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Section 451.90 - Endowment fund

451.90 Endowment fund. Funds, usually of a nonprofit institution, in which a donor has stipulated, as a condition of gift, that the principal of the fund is to be maintained inviolate and in perpetuity and that only income from investments of the fund may be expended.
 

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Section 451.91 - Enterprise

451.91 Enterprise. Any business undertaking; a business enterprise; without qualification the terms refers to an entire organization rather than a subdivision thereof.
 

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Section 451.92 - Equity

451.92 Equity. (a) Any right or claim to assets.

(b) An interest in property or in a business, subject to claims of creditors.

(c) The difference between assets and liabilities.

(d) Net worth.
 

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Section 451.93 - Equity ownership

451.93 Equity ownership. (a) The interest of an owner in property or in a business or other organization, subject, in case of liquidation, to prior claim of creditors.

(b) The interest (paid-in capital and retained earnings) of a stockholder or of stockholders collectively in a corporation; proprietorship.
 

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Section 451.94 - Examination

451.94 Examination. Audit.
 

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Section 451.95 - Exception

451.95 Exception. A qualification by an auditor in his report, indicating a limitation as to the scope of his audit or disagreement with or doubt concerning an item of a financial statement on which he is reporting.
 

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Section 451.96 - Exhibit

451.96 Exhibit. A financial or other statement of a formal character prepared for the information of others, as in an auditor's report.
 

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Section 451.97 - Expected life

451.97 Expected life. Length of life or years of service of an asset or asset group at a particular moment of time.
 

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Section 451.98 - Expenditure

451.98 Expenditure. (a) The incurring of a liability, the payment of cash or the transfer of property for the purpose of acquiring an asset or service or settling a loss.

(b) The amount of cash or property paid or to be paid for a service rendered, or an asset purchased.

(c) Any cost, the benefits of which may extend beyond the current accounting period.
 

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Section 451.99 - Expense

451.99 Expense. Expired cost; any item or class of cost of (or loss from) carrying on an activity; a present or past experience defraying a present operating cost or representing an irrecoverable cost or loss.
 

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Section 451.100 - Expense center

451.100 Expense center. Any location within an organization at which the coincidence of organization and function has been recognized; an activity.
 

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Section 451.101 - Expired cost

451.101 Expired cost. An expenditure from which no further benefit is anticipated; an expense; a cost absorbed over the period during which benefits were enjoyed or a loss incurred.
 

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Section 451.102 - External audit

451.102 External audit. An audit by a person not an employee; an independent audit.
 

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Section 451.103 - Extraordinary depreciation

451.103 Extraordinary depreciation. Depreciation caused by unusual wear and tear, unexpected disintegration, obsolescence or inadequacy beyond that attributable to ordinary loss of physical or service life.
 

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Section 451.104 - Facility

451.104 Facility. A residential health care facility; may be a distinct part of a hospital.
 

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Section 451.105 - Fair market value

451.105 Fair market value. The price for which an asset would be purchased in an arm's-length transaction as a result of good-faith bargaining between a sophisticated buyer and seller, neither being under any compulsion to buy or sell.
 

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Section 451.106 - Fidelity bond

451.106 Fidelity bond. Insurance against losses arising from dishonest acts of employees involving money, merchandise or other property.
 

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Section 451.107 - Fiduciary

451.107 Fiduciary. Any person responsible for the custody or administration, or both, of property belonging to another; as, a trustee.
 

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Section 451.108 - Financial accounting

451.108 Financial accounting. The accounting for revenues, expenses, assets and liabilities that is commonly carried on in the general offices of a business.
 

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Section 451.109 - Financial Accounting Standards Board (FASB)

451.109 Financial Accounting Standards Board (FASB). A quasi-independent organization established in 1873 by the AICPA-sponsored Financial Accounting Foundation for the purpose of developing principles for financial reporting by business enterprises.
 

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Section 451.110 - Financial statement

451.110 Financial statement. A balance sheet, income statement, funds statement, or any supporting statement or other presentation of financial data derived from accounting records.
 

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Section 451.111 - Fiscal year

451.111 Fiscal year. The facility's uniform period between one annual reporting of financial accounts and the next reporting.
 

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Section 451.112 - Fixed asset

451.112 Fixed asset. (a) A tangible asset held for the services it yields in the production of goods and services; any item of plant.

(b) A balance sheet classification denoting capital assets other than intangibles and investments in affiliated companies or other long-term investments. included in the usual fixed-asset categories are land (from which the flow of services is seemingly permanent), buildings, building equipment, fixtures, machinery, tools (large and small), furniture, office devices, patterns, drawings, dies, and often containers; generally excluded are goodwill, patents and other intangibles. The characteristic fixed asset has a limited life (land is the one important exception), and, in organizations where expenses are accounted for, its cost, less estimated salvage at the end of its useful line, is distributed over the periods it benefits by means of provisions of depreciation.
 

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Section 451.113 - Fixed capital

451.113 Fixed capital. The investment in capital assets.
 

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Section 451.114 - Fixed cost (or expense)

451.114 Fixed cost (or expense). An operating expense, or operating expense as a class, that does not vary with business volume. Examples: interest on bonds; rent; property tax; depreciation (sometimes in part); minimal amounts of general overhead. Fixed costs are not fixed in the sense that they do not fluctuate or vary; they vary, but from causes independent of volume.
 

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Section 451.115 - Fringe benefit

451.115 Fringe benefit. See employee benefit.
 

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Section 451.116 - Functional

451.116 Functional (a) The general end or purpose sought to be accomplished by an organizational unit. Examples: administrative services; skilled nursing; physical therapy; research; plant operation and maintenance; dietary.

(b) A group of related activities serving a common end.
 

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Section 451.117 - Functional

451.117 Functional. Adapted to and capable of performance; a function or service performed by one organizational unit for another.
 

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Section 451.118 - Functional accounting

451.118 Functional accounting. Accounting by functions and activities; activity accounting.
 

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Section 451.119 - Fund

451.119 Fund. A self-contained accounting entity set up to account for a specific activity or project.
 

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Section 451.120 - Fund account

451.120 Fund account. Any account reflecting transactions of a fund.
 

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Section 451.121 - Fund accounting

451.121 Fund accounting. Maintenance of separate and/or group accounts for health facility resources according to spending objectives set by donors, other outside sources or the governing body.
 

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Section 451.122 - Fund asset

451.122 Fund asset. An asset belonging to a particular fund or a group of funds.
 

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Section 451.123 - Fund balance

451.123 Fund balance. The excess of assets over liabilities (net equity). An excess of liabilities over assets is known as a deficit in fund balance.
 

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Section 451.124 - Fund balance sheet

451.124 Fund balance sheet. A balance sheet divided into self-balancing sections, each of which shows the assets and liabilities of a single fund or group of related funds.
 

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Section 451.125 - Funded debt

451.125 Funded debt. Debt evidenced by outstanding bonds or long-term notes.
 

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Section 451.126 - Funded reserve

451.126 Funded reserve. A pension reserve, a reserve for bonuses or for the retirement of preferred stock, or other prospective future liability against which certain assets have been accumulated and set aside or earmarked.
 

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Section 451.127 - Fund group

451.127 Fund group. A group of funds of similar character which are brought together for administrative and reporting purposes. Examples: current funds; loan funds; endowment funds; plant funds; agency funds.
 

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Section 451.128 - Fund liability

451.128 Fund liability. A liability of a fund which is to be met out of its existing resources.
 

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Section 451.129 - Funds held in trust by others

451.129 Funds held in trust by others. Funds held and administered, at the direction of the donor, by an outside trustee for the benefit of an institution or institutions.
 

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Section 451.130 - Generally accepted accounting principles

451.130 Generally accepted accounting principles. Accounting principles currently approved by the American institute of Certified Public Accountants,
 

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Section 451.131 - Generally accepted auditing standards

451.131 Generally accepted auditing standards. Auditing standards currently approved by the American institute of Certified Public Accountants.
 

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Section 451.132 - General journal

451.132 General journal. The journal in which are recorded transactions not provided for in specialized journals.
 

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Section 451.133 - General ledger

451.133 General ledger. A ledger containing accounts in which all the transactions of a business enterprise or other accounting unit are classified, either in detail or in summary form.
 

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Section 451.134 - Generally accepted

451.134 Generally accepted. Given authoritative recognition; said of accounting principles or audit standards, and the pronouncements concerning them, particularly, in recent years, those of the American Institute of Certified Public Accountants and the Financial Accounting Standards Board.
 

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Section 451.135 - Gross

451.135 Gross. Undiminished by related deductions, except corrections; applied to sales, revenues, income, expense and the like.
 

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Section 451.136 - Group I equipment

451.136 Group I equipment. Equipment permanently attached to the structure (fixed equipment).
 

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Section 451.137 - Group II equipment

451.137 Group II equipment. Equipment and furnishings not permanently attached to the structure (movable equipment).
 

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Section 451.138 - Group III equipment

451.138 Group III equipment. Equipment and supplies with a relatively short, useful life (minor equipment).
 

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Section 451.139 - HFMA

451.139 HFMA. Hospital Financial Management Association.
 

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Section 451.140 - Historical cost

451.140 Historical cost. The total actual cost incurred in acquiring and preparing a fixed asset for use. This cost includes items, if any, which would be capitalized under generally accepted accounting principles in addition to purchase price; e.g., installation costs.
 

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Section 451.141 - Home office

451.141 Home office. The office of the controlling organization. This office generally incurs costs and provides services to or on behalf of the individual health facility.
 

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Section 451.142 - Hospital

451.142 Hospital. An establishment with an organized medical staff; with permanent facilities that include inpatient beds; and with medical services, including continuous nursing services, that provide diagnosis and treatment for patients.
 

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Section 451.143 - Imprest cash

451.143 Imprest cash. Imprest fund.
 

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Section 451.144 - Imprest fund

451.144 Imprest fund. (a) A fixed cash fund or petty cash fund in the form of currency, a bank checking account, or both, maintained for expenditures that must be made in cash, and from time to time restored to its original amount by a transfer from general cash of a sum equal to the aggregate of disbursements.

(b) A form of working fund.
 

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Section 451.145 - Imprest system

451.145 Imprest system. The system under which imprest cash in disbursed and from time to time restored to its original amount through reimbursements equal to sums expended. Implicit in the concept is the review by a higher authority of the propriety of the expended amounts before reimbursement is approved.
 

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Section 451.146 - Improvement

451.146 Improvement. (a) Betterment.

(b) The clearing, draining, grading, or other addition to the worth of a tract of land; any cost of developing real estate, whether paid for directly or through special assessment taxes.
 

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Section 451.147 - Imputed value of services rendered

451.147 Imputed value of services rendered. The dollar value of specified services, computed according to formulas established by the department.
 

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Section 451.148 - Income realization

451.148 Income realization. The recognition of income, the usual test being the passage of title to or delivery of goods, or the performance of services.
 

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Section 451.149 - Income statement

451.149 Income statement. A summary of the revenues and expenses of an accounting unit, or group of such units, for a specified period.
 

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Section 451.150 - Increment

451.150 Increment. (a) An increase in value from one point of time to another, without reference to cost or book value.

(b) Unearned increment has reference to an increase in the value of land from causes to which the owner has made no contribution, as from growth of population.
 

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Section 451.151 - Indirect cost

451.151 Indirect cost. A functional cost not attributed to the production of a specified good or service but to an activity associated with production generally.
 

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Section 451.152 - Indirect liability

451.152 Indirect liability. (a) An obligation not yet incurred but for which responsibility may have to be assumed in the future; as, the possible liability from the premature settlement of a long-term contract.

(b) A debt of another, as the result of which an obligation to pay may develop.

(c) A contingent liability.
 

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Section 451.153 - Initial occupancy period

451.153 Initial occupancy period. The period Commencing with the first month prior to the admittance of the first patient and ending with the day preceding the permanent financial occupancy date. The initial occupancy period is part of the development period.
 

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Section 451.154 - Initial occupancy expense

451.154 Initial occupancy expense. All expenses incurred and all income earned related to patient care accounted for on the accrual basis during the initial occupancy period, except for:

(a) interest expense and interest income;

(b) any additional New York State Housing Finance Agency financing expense;

(c) accounting fees of outside independent accountants; and

(d) legal fees.
 

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Section 451.155 - Inpatient

451.155 Inpatient. A person who is provided with room, board and continuous nursing service in a health facility.
 

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Section 451.156 - Inpatient admission

451.156 Inpatient admission. The formal acceptance by a health facility of a patient who is to be provided with room, board and continuous nursing service in an area of the health facility where patients generally stay at least overnight.
 

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Section 451.157 - Inpatient bed count

451.57 Inpatient bed count. The number of available health facility inpatient beds, both occupied and vacant, on any given day.
 

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Section 451.158 - Inpatient bed count day

451.158 Inpatient bed count day. A unit of measure denoting the presence of one inpatient bed (either occupied or vacant) set up and staffed for use in one 24-hour period.
 

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Section 451.159 - Inpatient bed count days (total)

451.159 Inpatient bed count days (total). The sum of inpatient bed count days for each of the days in the period under consideration.
 

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Section 451.160 - Inpatient bed occupancy ratio

451.160 Inpatient bed occupancy ratio. The proportion of inpatient beds occupied, defined as the ratio of inpatient service days to inpatient bed count days in the period under consideration.
 

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Section 451.161 - Inpatient census

451.161 Inpatient census. See daily inpatient census.
 

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Section 451.162 - Inpatient discharge

451.162 Inpatient discharge. The termination of period of inpatient care through the formal release of an inpatient by a health care facility.
 

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Section 451.163 - Intangible assets

451.163 Intangible assets. Nonphysical assets (e.g., goodwill, an agreement not to compete), almost always noncurrent.
 

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Section 451.164 - Interfund transfer

451.164 Interfund transfer. The transfer of money or other asset, or of a liability, from one fund to another.
 

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Section 451.165 - Interest

451.165 Interest. The cost incurred for the use of borrowed funds.
 

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Section 451.166 - Interest on capital indebtedness

451.166 Interest on capital indebtedness. The cost incurred for funds borrowed for capital purposes. Examples: acquisition of facilities, equipment and capital improvements. Generally, loans for capital purposes are long-term loans.
 

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Section 451.167 - Internal control

451.167 Internal control. (a) The general methodology by which management is carried on within an organization; also, any of the numerous devices for supervising and directing an operation or operations generally. Internal control, a management function, is a basic factor operating in one form or another in the administration of every organization, business or otherwise. Although sometimes identified with the administrative organism itself, it is often characterized as the nervous system that activates overall operating policies and keeps them within practicable performance ranges. The principal elements contributing to internal control are usually these:

(1) recognition that within every organizational unit there are one or more functional or action components known as activities, cost or responsibility centers, or management units with appropriate segregation of functional responsibilities;

(2) delegated operating authority in each organizational unit permitting freedom of action within defined limits;

(3) the linking of expenditures--their incurrence and disposition--with specified individual authority;

(4) end-product planning:

(i) by means of a budget fitted to the organizational structure and to its functional components, thus maintaining dual forward operating disciplines; and

(ii) the adoption of standards of comparison and other performance measurements such as standard costs, quality controls and timing goals;

(5) an accounting process and system of record procedures adequate to provide organizational and functional administrators with reasonable accounting control over assets, liabilities, revenues and expenses and also provide administrators with prompt, complete and accurate information on operating performance, and comparisons with predetermined performance standards;

(6) periodic reports, consonant with accounting and related records, by activity heads to supervisory management; reports serving as feedbacks of informative pictures of operations, and as displays of favorable and unfavorable factors that have influenced performance;

(7) internal check, built into operating procedures, and providing maximum protection against fraud and error;

(8) frequent professional appraisals, through internal audit, of management and its policies and operations generally, as a protective and constructive management service, its emphasis varying with the quality of operating policies and their administration.

(b) The construction of the above controls in such a manner as to stimulate and take full advantage of those natural attributes of individual employees. i.e., personnel of a quality commensurate with responsibilities.
 

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Section 451.168 - Inventory

451.168 Inventory. The dollar value (computed in accordance with generally accepted accounting principles) of merchandise, materials and supplies on hand at the close of a facility's accounting period.
 

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Section 451.169 - Inventory control

451.169 Inventory control. The control of merchandise, materials, goods in process, finished goods, and supplies on hand by accounting and physical methods. An accounting control is effected by means of a stock or stores ledger, mechanical storage records, or a ledger account in which the quantities or amounts (or both) of goods received during an accounting period are added to corresponding balances at the beginning of the period and amounts of goods sold or otherwise disposed of are deducted at a calculated cost based on individual identification or any of various methods of averaging. Physical controls consist of various plans of buying, storing. handling, issuing, supervising and stocktaking. Stockledger control is made more effective by physical control in the nature of a continuous check of the goods on hand.
 

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Section 451.170 - Inventory valuation

451.170 Inventory valuation. The determination of the costs or the portion of cost assignable to on-hand raw materials, merchandise held for resale, and supplies based on any generally accepted method consistently applied.
 

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Section 451.171 - Invested capital

451.171 Invested capital. (a) The amount of capital contributed to a business by its owners; capital.

(b) The amount so contributed, plus retained earnings (or less accumulated losses) and appropriated surplus.
 

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Section 451.172 - Ledger control

451.172 Ledger control. The control of a subsidiary record or ledger by the use of a control account. Ledger control is limited to a proof that all items were recorded in the subsidiary record or that they were accurately made, as required, to the debit and credit sides of that record. It does not furnish proof that every item was recorded in its proper account in the subsidiary record.
 

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Section 451.173 - Length of stay (for one patient)

451.173 Length of stay (for one patient). The number of calendar days from admission to discharge, counting the day of admission but not the day of discharge.
 

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Section 451.175 - Leasehold improvements

451.175 Leasehold improvements. Those improvements made by the owners of a facility to leased land, buildings or equipment.
 

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Section 451.176 - Liability

451.176 Liability. (a) An amount owing by one person (a debtor) to another (a creditor), payable in money, or in goods or services; the consequence of an asset or service received or a loss incurred or accrued; particularly, any debt:

(1) due or past due (current liability);

(2) due at a specified time in the future (e.g., funded debt, accrued liability); or

(3) due only to failure to perform a future act (deferred income, contingent liability).

(b) The title of the credit half of a balance sheet, often including net worth as well as obligations to outsiders; when thus used, the inference is that the organization reflected in the balance sheet has a status independent of both its creditors and its owners--to whom it must account in the amounts shown.
 

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Section 451.177 - Licensed bed capacity

451.177 Licensed bed capacity. The maximum number of beds which a provider may keep occupied under the terms of its license.
 

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Section 451.178 - Limited-life asset

451.178 Limited-life asset. Any capital asset, as a building, machine or patent, the usefulness of which to its owner is restricted by its physical life or by the period during which it contributes to operations.
 

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Section 451.179 - Liquid asset

451.179 Liquid asset. Cash in banks and on hand, and other cash assets not set aside for specific purposes other than the payment of a current liability, or a readily marketable investment. The term is somewhat less restrictive than cash asset and much more restrictive than quick asset.
 

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Section 451.180 - Living trust funds

451.180 Living trust funds. Funds acquired by an institution subject to agreement whereby resources are made available to the institution on condition that the institution pay periodically to a designated person, or persons, the income earned on the resources acquired for the lifetime of the designated person, or persons, or for a specified period.
 

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Section 451.181 - Maintenance

431.181 Maintenance. The keeping of property at a standard of operating condition; also, the expense involved. Example: recurring operations of cleaning, oiling, repairing and adjusting. Maintenance cost includes outlays for:

(a) labor and supplies;

(b) the replacement of any parts that constitute less than a retirement unit; and

(c) major overhauls, the item of which may involve elements of the first two classes.
 

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Section 451.182 - Management

451.182 Management. (a) Executive authority; the combined fields of policy and administration.

(b) As applied to individuals:

(1) the head of an organization; or

(2) collectively, the head and his immediate staff and any or all persons possessing supervisory persons' delegated authority; or

(3) broadly, the persons within an organization who originate transactions.
 

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Section 451.183 - Materiality

451.183 Materiality. (a) The relative importance, when measured against a standard of comparison, of any item included in or omitted from books of account or financial statements, or of any procedure or change in procedure that conceivably might affect such statements.

(b) The characteristic attaching to a statement, fact or item whereby its disclosure or the method of giving it expression would be likely to influence the judgment of a reasonable person.
 

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Section 451.184 - Matrix inversion

451.184 Matrix inversion. A process of allocating a department's costs to all other departments by solving simultaneous equations.
 

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Section 451.185 - Medical recipient

451.185 Medical recipient. A recipient of medical assistance under title XIX of the Social Security Act or of State-funded medical care services.
 

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Section 451.186 - Medical services

451.186 Medical services. The services pertaining to medical care that are performed at the direction of a physician on behalf of patients by physicians, dentists, nurses and other professional and technical personnel.
 

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Section 451.187 - Medicare

451.187 Medicare. A third-party reimbursement program administered by the Social Security Administration that underwrites the medical costs of persons 65 and over and some qualified persons under 65. "Part A" covers hospital services and "Part B" covers physicians' services.
 

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Section 451.188 - Multi-facility provider

451.188 Multi-facility provider. A provide delivering two or more types of health care; e.g., a hospital and residential health care facility, or a retirement home and residential health care facility.
 

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Section 451.189 - Net worth

451.189 Net worth. The aggregate appearing on the accounting records of the equities representing proprietary interests; the excess of the going concern's value of assets over liabilities to outsiders; of a corporation, the total of paid-in capital, retained earnings and appropriated surplus; of a sole proprietorship, the proprietor's account; of a partnership, the sum of the partners' accounts.
 

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Section 451.190 - Nominal account

451.190 Nominal account. Any of the accounts the balances of which are transferred to retained earnings at the close of each fiscal year; so-called because such accounts reflect completed transactions or expired costs.
 

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Section 451.191 - Nonallowable cost

451.191 Nonallowable cost. A cost which does not meet every test of an allowable cost as defined in this Part.
 

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Section 451.192 - Nonoperating revenue

451.192 Nonoperating revenue. The revenues of an enterprise derived from sources other than its regular activities; other revenue.
 

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Section 451.193 - Nonprofit corporation

451.193 Nonprofit corporation. An incorporated charity, or any corporation operated under a policy by which no stockholder or trustee shares in the profits or losses, if any, of the enterprise.
 

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Section 451.194 - Nonrestricted funds

451.194 Nonrestricted funds. Unrestricted funds. Funds which are not restricted to a specific use by the donor. Examples of unrestricted funds include operating and board-designated funds.
 

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Section 451.195 - Nonrevenue-producing cost centers

451.195 Nonrevenue-producing cost centers. These are overhead units, such as dietary and plant operations and maintenance, that provide necessary support services to revenue-producing centers.
 

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Section 451.196 - Object classification

451.196 Object classification. A method of classifying expenditures according to their natural classification, such as salaries and wages, employee benefits, supplies, purchased services, etc.
 

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Section 451.197 - Obsolescence

451.197 Obsolescence. The loss in usefulness of an asset, occasioned by the approach to the state of economic uselessness through progress of the arts; economic inutility arising from external causes; disappearing usefulness resulting from invention, change of style, legislation, or other causes having no physical relation to the object affected. It is distinguished from exhaustion, wear and tear, and deterioration, in that these terms refer to a functional loss arising out of a change in physical condition.
 

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Section 451.198 - Occasion of service

451.198 Occasion of service. A specific identifiable instance of an act of service involved in the medical care of health facility patients.
 

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Section 451.199 - Occupancy expense

451.199 Occupancy expense. Expense relating to the use of property. Examples: rent, heat, light, depreciation, upkeep, and general care of premises occupied.
 

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Section 451.200 - Operating budget

451.200 Operating budget. A budget covering recurrent revenue and expense.
 

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Section 451.201 - Operating cost (or expense)

451.201 Operating cost (or expense). An expense incurred in conducting the ordinary major activities of an enterprise, usually excluding nonoperating expense or income deductions.
 

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Section 451.202 - Operating income (or profit)

451.202 Operating income (or profit). The excess of revenues of a business enterprise over the expenses pertaining thereto, excluding income and expense derived from sources other than its regular activities.
 

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Section 451.203 - Operational period

451.203 Operational period. The period commencing with the permanent financial occupancy date.
 

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Section 451.204 - Organizational unit

451.204 Organizational unit. Any administrative subdivision of an enterprise, especially one charged with carrying on one or more functions or activities.
 

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Section 451.205 - Original cost

451.205 Original cost. Outlay for an asset by its owner, not including any adjustments of cost arising from post-acquisition alterations, improvement or depreciation.
 

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Section 451.206 - Outpatient

451.206 Outpatient. A person who receives health care services in a health facility without being admitted as a bed patient.
 

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Section 451.207 - Outstanding

451.207 Outstanding. (a) Uncollected or unpaid; said of an account or note receivable or payable, or of a check sent to the payee but not yet cleared against the drawee bank.

(b) in the hands of others; said of the units of funded debt of a corporation or of the certificates representing issued shares of capital stock in the hands of the public; treasury stock is defined in terms of shares issued but not outstanding.
 

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Section 451.208 - Overhead

451.208 Overhead. (a) Any cost of doing business other than a direct cost of an output of product or service.

(b) A general name for costs of materials and services not directly adding to or readily identifiable with the product or services constituting the main object of an operation.
 

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Section 451.209 - Owner

451.209 Owner. The entity which is legally responsible for the operation of a provider, and thus for decisions and for liabilities arising in the course of its operation.
 

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Section 451.210 - Paid-in capital

451.210 Paid-in capital. The total amount of cash, property and services contributed to a corporation by its stockholders and constituting a major balance sheet item. It may be reflected in a single account or divided between capital stock and additional paid-in capital accounts.
 

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Section 451.211 - Part A and Part B services

451.211 Part A and Part B services. Medicare benefits are payable from two funds. Part A services, which, in general, are those rendered by institutions, are reimbursed from funds derived from payroll tax. Part B services, generally medical and surgical physicians' services, and outpatient treatment and diagnosis, are reimbursed from the fund created by voluntary premium payments and general Federal revenues.
 

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Section 451.212 - Patient day

451.212 Patient day. A calendar day of patient care. In computing calendar days of care, the day of admission is always counted. The day of discharge is counted only when the patient was admitted on the same day. A patient is admitted for purposes of this definition when he or she is physically present, is assigned a bed, and a patient medical record is opened.
 

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Section 451.213 - Payroll distribution

451.213 Payroll distribution. (a) An analysis of the total amount of salaries and wages paid or accrued for a period, showing the component amounts to be charged to the various departments, operations, activities or products affected.

(b) The entry by which the amount of salaries and wages paid or accrued for a period is charged in the required detail to the accounts or records.
 

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Section 451.214 - Permanent financial occupancy date

451.214 Permanent financial occupancy date. The date declared by the Commissioner of Health or his designee after a facility has been occupied for a period of time. This date is a financial concept date; it is not the date a facility admits its first patient.
 

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Section 451.215 - Per patient day costs (PPD)

451.215 Per patient day costs (PPD). Total allowable costs divided by total patient days for the period covered.
 

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Section 451.216 - Petty cash fund

451.216 Petty cash fund. See imprest fund.
 

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Section 451.217 - Plant

451.217 Plant. Physical properties used for institutional purposes; i.e., land, building, improvements, equipment and so forth. The term does not include real estate or properties of restricted or unrestricted funds not used for health facility operations.
 

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Section 451.218 - Plant replacement and expansion funds

451.218 Plant replacement and expansion funds. Funds restricted by donor or granted for renewal, expansion or replacement of plant.
 

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Section 451.219 - Pooled investments

451.219 Pooled investments. Assets of two or more funds consolidated for investment purposes.
 

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Section 451.220 - Pre-operating expenses

451.220 Pre-operating expenses. The one-time expenses of a new provider incurred prior to the admission of any patients.
 

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Section 451.221 - Prepaid expense

451.221 Prepaid expense. The portion of an expenditure which has been made which will be charged against revenue within 12 months following the date of the statement of operations.
 

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Section 451.222 - Principal

451.222 Principal. A sum on which interest accrues; capital, as distinguished from income.
 

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Section 451.223 - Proprietary accounts

451.223 Proprietary accounts. (a) The accounts, including nominal accounts, containing the equities of owners.

(b) Governmental accounting. The accounts reflecting the assets and liabilities, and displaying the results of operations in terms of revenue, expense, surplus or deficit.
 

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Section 451.224 - Prorate

451.224 Prorate. To assign or redistribute a portion of a cost, such as a joint cost, to a department, operation, activity or product according to some formula or other agreed-to, often arbitrary, procedure.
 

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Section 451.225 - Prudent buyer concept

451.225 Prudent buyer concept. The price paid for items by a prudent buyer in the open market under competitive conditions.
 

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Section 451.226 - Purchased services

451.226 Purchased services. Services directly or indirectly related to patient care which a provider contracts for with an outside individual or firm.
 

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Section 451.227 - Quick asset

451.227 Quick asset. A current asset normally convertible into cash within a relatively short period, such as a month. Examples: cash, call loan, marketable security, customer's account, a commodity immediately salable at quoted prices on the open market.
 

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Section 451.228 - Reasonable cost

451.228 Reasonable cost. Those costs which are determined by the Department of Health as reasonable in comparison to like expenses incurred by other similar facilities.
 

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Section 451.229 - Related organization

451.229 Related organization. An entity which, to a significant extent, is under common ownership and/or control with, or has control of or is controlled by, the provider. An entity is deemed to control another entity if it has a significant ownership interest in the other, or if it has the power, whether or not exercised, to influence directly or indirectly the activities or policies of the other.
 

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Section 451.230 - Repair

451.230 Repair. (a) The restoration of a capital asset to its full productive capacity, or a contribution thereto, after damage, accident or prolonged use, without increase in its previously estimated service life or productive capacity.

(b) The charge to operations representing the cost of such restoration.
 

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Section 451.231 - Replacement

451.231 Replacement. The substitution of one fixed asset for another, particularly of a new asset for an old, or of a new part for an old part. On the books of account, the recognition of the cost of the new asset requires the elimination of the cost of the asset it replaces.
 

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Section 451.232 - Replacement cost

451.232 Replacement cost. (a) The cost of an acquired asset or asset part, capitalizable if the cost of its retired counterpart is removed from the asset account.

(b) The cost at current prices, in a particular locality or market area, of replacing an item of property or a group of assets.
 

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Section 451.233 - Residential health care facility

451.233 Residential health care facility. All facilities or organizations covered by the term nursing home as defined in article 28 of the Public Health Law, including hospital-based residential health care facilities, provided that such facility possesses a valid operating certificate issued by the State Commissioner of Health and, where required, has been established by the Public Health Council.
 

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Section 451.234 - Responsibility accounting

451.234 Responsibility accounting. The classification, management, maintenance, review, appraisal of accounts serving the purpose of providing information on the quality, quantity and standards of performance attained by persons to whom authority has been assigned.
 

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Section 451.235 - Restricted funds

451.235 Restricted funds. Funds designated by the donors, governmental units and endowments for special nonoperating purposes.
 

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Section 451.236 - Retained earnings (or income)

451.236 Retained earnings (or income). Accumulated net income, less distributions to stockholders and transfers to paid-in capital accounts.
 

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Section 451.237 - Retirement of indebtedness funds

451.237 Retirement of indebtedness funds. Funds required by external sources to be used to meet debt-service charges and the retirement of indebtedness on plant assets. The term sinking funds is sometimes used to describe these funds.
 

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Section 451.238 - Return on capital investment

451.238 Return on capital investment. A rate of return on owner's net equity.

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Section 451.239 - Revenue

451.239 Revenue. (a) Sales of products, merchandise and services, and earnings from interest, dividends, rent and wages; transactions resulting in increases in assets.

(b) Governmental accounting. The gross receipts and receivables of a governmental unit derived from taxes, customs and other sources, but excluding appropriations and allotments.
 

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Section 451.240 - Revenue-producing cost centers

451.240 Revenue-producing cost centers. Health facility departments providing direct services to patients (such as nursing, physical therapy and laboratory) and thereby generating revenue.
 

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Section 451.241 - Revolving fund

451.241 Revolving fund. A fund from which moneys are continuously expended, replenished, and again expended. Examples: imprest cash; working funds; assets available for loans, the repayments of which are available for other loans.
 

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Section 451.242 - Round off

451.242 Round off. To simplify the presentation of a quantity by omitting its terminal digits, with the express purpose of displaying only significant figures.
 

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Section 451.243 - Schedule

451.243 Schedule. A supporting, explanatory or supplementary analysis accompanying a balance sheet, income statement or other statement prepared from the books of account.
 

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Section 451.244 - Service cost

451.244 Service cost. (a) The cost of any service.

(b) The amortizable cost of a limited-life asset; i.e., the asset cost, less estimated recovery, if any, from resale or scrap. Service cost is the amount to be depreciated over the useful life of a fixed asset.
 

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Section 451.245 - Share of pooled investments

451.245 Share of pooled investments. The proportion of pooled investments, including accumulated gains or losses, owned by a particular fund, usually expressed by a number (units) indicating the fractional ownership of total shares in the pool or by a percentage expressing the portion of the total pool owned by the particular fund.
 

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Section 451.246 - Sinking fund

451.246 Sinking fund. Retirement of indebtedness funds.
 

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Section 451.247 - Special purpose fund

451.247 Special purpose fund. Specific purpose funds.
 

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Section 451.248 - Specific purpose funds

451.248 Specific purpose funds. Funds restricted for a specific purpose or project. Board-designated funds do not constitute specific purpose funds.
 

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Section 451.249 - Stepdown method

451.249 Stepdown method. The allocation of the accumulated costs of the nonrevenue-producing centers to those other nonrevenue-producing centers which utilize their services, as well as to the revenue-producing centers to which they render service. Once the costs of a nonrevenue-producing center have been allocated, that center is considered closed.
 

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Section 451.250 - Straight-line method

451.250 Straight-line method. The assignment of equal segments of the service cost of any item to the benefits to be yielded by the item; a procedure followed in depreciation computations and in the spread of prepaid expenses and bond discount. In practice, a period charge for depreciation is usually substituted for a more exact measurement of benefits yielded because of:

(a) its relative simplicity;

(b) the presence of only minor differences between the two methods;

(c) the impossibility of estimating with any degree of realism the total prospective output of services, as in the case of many types of machinery; or

(d) the absence of any ready determinable unit of service, as in the case of buildings. See amortization; apportionment; deferred charge.
 

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Section 451.251 - Tangible assets

451.251 Tangible assets. Physical assets (e.g., building, equipment inventory).
 

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Section 451.252 - Temporary funds

451.252 Temporary funds. See specific purpose funds.
 

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Section 451.253 - Term endowment funds

451.253 Term endowment funds. Donated funds which, by the terms of the agreement, become available either for any legitimate purpose designated by the board or for a specific purpose designated by the donor upon the happening of an event or upon the passage of a stated period of time.
 

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Section 451.254 - Trial balance

451.254 Trial balance. A list or abstract of the balances or of total debits and total credits of the accounts in a ledger, the purpose being to determine the quality of posted debits and credits and to establish a basic summary for financial statements. The term is also applied to a list of account balances (and their total) abstracted from a customer's ledger or other subsidiary ledger for the purpose of testing their totals with the related control account.
 

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Section 451.255 - Trade discount

451.255 Trade discount. The discount allowed to a class of customers on a list price before consideration of credit terms; as a rule, invoice prices are recorded in the books of account net after deduction of trade and quantity discounts.
 

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Section 451.256 - Total inpatient service days

451.256 Total inpatient service days. The sum of all inpatient service days for each of the days in the period under consideration.
 

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Section 451.257 - Total length of stay (for all inpatients)

451.257 Total length of stay (for all inpatients). The sum-of-the-days' stay of any group of inpatients discharged during a specified period of time.
 

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Section 451.258 - Unit of service

451.258 Unit of service. A unit of measure, often commonly accepted, for determining average cost, time or efficiency, thus making possible:

(a) comparisons of one operation with another, or with the same operation in a preceding period; and

(b) estimates of future operations.
 

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Section 451.259 - Unrestricted funds

451.259 Unrestricted funds. Funds which bear no external restrictions as to use or purpose, i.e., funds which can be used for any legitimate purpose designated by the governing board as distinguished from funds restricted externally for specific operating purposes, for plant replacement and expansion, and for endowment.
 

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Section 451.260 - Useful life

451.260 Useful life. Normal operating life in terms of utility to the owner: said of a fixed asset or a fixed-asset group; the period may be more or less than physical life or any commonly recognized economic life; service life.
 

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Section 451.261 - Valuation account (or reserve)

451.261 Valuation account (or reserve). An account which relates to and partly or wholly offsets one or more other accounts; as, accumulated depreciation or allowance for bad debts; unamortized debt discount.
 

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Section 451.262 - Weighted average

451.262 Weighted average. A simple average of items reduced to a common basis. For example, purchases of certain raw material are made during a given month as follows:

Units Price each Total cost

150 $1.50 $225.00

175 1.40 245.00

50 1.32 66.00

65 1.30 84.50

___ _____ _______

440 $5.52 $620.50

The simple average of prices paid is $5.52 / 4, or $1.38; but the weighted average would be the total cost divided by the number of units purchased: $620.50 / 440, or $1.41.
 

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