Generally Accepted Accounting Principles Essay

850 Words Dec 25th, 2010 4 Pages
GAAP for Health Care

The mutual set of accounting criteria used to develop medical centers financial statements are known as generally accepted accounting principles (GAAP). GAAP are a mixture of respected criteria created by Securities and Exchange Commission (SEC) and accountants. The SEC has authority granted by The Securities Act of 1933 and the Securities Exchange Act of 1934, to determine reporting and disclosure requirements. Oversight is the general functions of the SEC, granting the Governmental Accounting Standards Board (GASB) to determine the standards. Generally accepted accounting practices are required for accountant to follow and medical centers to use so medical centers and provide investors with a minimal
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Since there is a discrepancy, the production department will need to presents undeniable proof to authentication the appraisal, the medical center auditor has a duty to adhere to the conservatism principles and prepare for the five-percent rate return. Losses and costs are documented when they are credible and equitably estimated. Profits are documented when achieved (Finkler & Ward, 2006).
Matching principle. The medical center expenditures for providing safe patient care should be documented with the corresponding fiscal year in which the income was produced. Documented in the same fiscal year as the income they help to generate. An illustration of this particular cost is the cost of products sold in the medical center, salaries paid to staff. It is consider when patients are admitted to the medical center and the supplies used to provide safe quality care. Revenue is recognized when reimbursed by Medicaid and Medicare (Finkler & Ward, 2006).
Cost principle. The dollar amount deducted from the budget to purchase land, medical equipment, and supplies. Assets are documented at price purchased, which is equivalent to the price paid to gain acquisition. When a medical centers assets such as property or office structures increase in worth each fiscal year, reappraisal in not required for financial reporting purposes (Finkler & Ward, 2006).
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