Chapter 30: Accounts Payable and Accounting Procedures

Question 1

accounting

Answer 1

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.

Question 2

accounting formula

Answer 2

the formula that is considered the basis for all financial accounting, which is assets minus liabilities equals net worth

Question 3

accounts receivable ratio

Answer 3

the total dollar amount of the outstanding payments or claims due to the office from patients and customers

Question 4

assets

Answer 4

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.

Question 5

balance sheet

Answer 5

also known as a “statement of financial position”, reveals a company’s assets, liabilities and owner’s equity (net worth).

Question 6

Collection ratios

Answer 6

a formula that determines how efficiently and timely an office is collecting payments for services rendered by the physicians

Question 7

cost ratio

Answer 7

a formula that demonstrates the cost of a specific procedure or service

Question 8

cost-benefit analysis

Answer 8

an analysis that allows for program evaluation by demonstrating whether the benefits received will outweigh its costs

Question 9

depleted

Answer 9

consumed, emptied, exhausted

Question 10

double-entry

Answer 10

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

Question 11

equity

Answer 11

the value or property beyond the total amount owed on it; net worth

Question 12

expenditure

Answer 12

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

Question 13

financial records

Answer 13

records that reflect the financial status of the medical office or business

Question 14

gross collection ratio

Answer 14

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.

Question 15

income statement

Answer 15

a statement that demonstrates the profit and expenses for a given month and also includes year-to-date information for a given year

Question 16

invoice

Answer 16

a document that includes itemization of goods and purchases or services provided together with the charges and terms of the agreement

Question 17

managerial accounting

Answer 17

the study and analysis of financial data as it applies to operational issues within a company; also known as cost accounting

Question 18

net collection ratio

Answer 18

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

Question 19

net worth

Answer 19

assets minus liabilities, which demonstrates the value of a business

Question 20

operating information

Answer 20

the information that is needed on a day-to-day basis in order for a company to conduct business

Question 21

petty cash

Answer 21

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

Question 22

trial balance

Answer 22

(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

Question 23

voucher

Answer 23

a document that serves as proof that the terms of a transaction have been met

Question 24

write-offs

Answer 24

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