Chapter 30: Accounts Payable and Accounting Procedures Flashcards
accounting
there are distinct differences between bookkeeping and accounting. Bookkeeping usually involved only the recording of economic events. The accounting process includes the bookkeeping function and much more. Accounting involves the entire process of identifying, recording, and communicating economic events.
accounting formula
the formula that is considered the basis for all financial accounting, which is assets minus liabilities equals net worth
accounts receivable ratio
the total dollar amount of the outstanding payments or claims due to the office from patients and customers
assets
anything owned that has exchange value; all the entries on a balance sheet that show the property or resources of a person or business; the money and items of value in a business.
balance sheet
also known as a “statement of financial position”, reveals a company’s assets, liabilities and owner’s equity (net worth).
Collection ratios
a formula that determines how efficiently and timely an office is collecting payments for services rendered by the physicians
cost ratio
a formula that demonstrates the cost of a specific procedure or service
cost-benefit analysis
an analysis that allows for program evaluation by demonstrating whether the benefits received will outweigh its costs
depleted
consumed, emptied, exhausted
double-entry
an accounting method of recording transactions that provides an equality of debits and credits. Using the double-entry system provides the two-sided (dual) effect of each transaction being recorded in the appropriate accounts. The double-entry system is universally used and provides a logical method for recording transactions and a means of proving the accuracy of the recorded amounts
equity
the value or property beyond the total amount owed on it; net worth
expenditure
actual payment of cash or cash equivalent for goods or services, or a charge against available funds in settlement of an obligation as evidenced by an invoice, receipt, voucher, or other such document; acquired material, property, or labor in exchange for money
financial records
records that reflect the financial status of the medical office or business
gross collection ratio
includes the total payments received by a practice for a specific period of time, not including any write-offs. The gross collection ratio can be calculates by taking the total payments for the specific period divided by the total charges, again without considering write-offs.
income statement
a statement that demonstrates the profit and expenses for a given month and also includes year-to-date information for a given year
invoice
a document that includes itemization of goods and purchases or services provided together with the charges and terms of the agreement
managerial accounting
the study and analysis of financial data as it applies to operational issues within a company; also known as cost accounting
net collection ratio
also known as the adjusted collection ratio. It is calculated by taking the total payments for a specific period of time divided by the total charges, with the write-offs deducted from the total charges
net worth
assets minus liabilities, which demonstrates the value of a business
operating information
the information that is needed on a day-to-day basis in order for a company to conduct business
petty cash
a small amount of cash available for small business expenses used for postage stamps, inexpensive office supplies, and small charitable donations, usually maintained in a locked container
trial balance
(1) bookkeeping strategy to confirm accuracy in debits and credits in ledger; (2) a balance sheet reports the assets, liabilities, and stockholders’ equity of a business enterprise at a specific date
voucher
a document that serves as proof that the terms of a transaction have been met
write-offs
a reduction in the value of an asset or earnings by the amount of an expense or loss, usually deemed uncollectible by any business; charges that are deemed uncollectible by any business
