The Accounting Principles Of Financial Statements And Balance Sheet And Valuations For The Health Care Organization

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Accounting in health care has profound effects on financial statements, and knowing the necessary components to conducting financial reports and balancing the assets is vital. Many things contribute to the overall foundation of the balance sheet and valuations for the health care organization. A lot of moving parts are required to keep health care organizations running and afloat for the long-term. One must understand the accounting concepts, and methods, terminology, in order to explain the various uses on how they apply to balance sheets. Valuing assets and Generally Accepted Accounting Principles (GAAP) method is effective for the right valuation as they will be explained in the following paragraphs.
Differences between Cash and Accrual Accounting
Cash accounting is a simple method which deals with revenue and expense within the health care organization and personal uses. This method can easily apply to everyday people as several people have a personal checkbook; they use to keep track of their expenses and depositing money every so often. Using a checkbook is how we withdraw money for expenses which is one standard way to pay for items. Cash basis accounting is also applied when reporting salaries for physicians or registered nurses as an expense and this would allow no revenue of patients treated by physicians until the following year when profits are collected. As good as method this is for people, accountants strive for a better way to assess the organizations’
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