Chapter 46 Exam Flashcards
Define accounting
the term for systematic recording and reporting of financial transactions
What types of accounting duties are performed by staff of the medical office?
- Keeping financial records
What types of accounting duties are performed by independent companies outside of the medical office?
- Financial planning
- Taxes
- Detailed financial reports
Define bookkeeping
The process of keeping detailed records of financial transactions
Define accounts receivable (AR)
Money owed to the practice
Define accounts payable (AP) and what types of things are paid for out of this
- Money the practice owes and bills they have to pay
What are cash disbursements and which account keeps a record of these?
- Accounts Payable
- Record of payments made to cover expenses of the practice
When is income calculated in the cash basis of accounting used by medical offices?
Enters income when the payment is received for the services
What is a major disadvantage of single entry bookkeeping systems?
- There is no method for cross-checking
Define liabilities
the amount owed by a business to creditors
Define patient ledger
A cumulative record of charges and payments that is kept on each patient
How often are charges and payments posted to patient accounts
daily
Most office computer billing programs are based on what type of bookkeeping system?
- Pegboard or “write it once” system
Define superbill
Form containing both diagnosis and procedure codes in addition to charges and payments
Who is responsible for checking the boxes on a charge slip for services provided?
the physician
Define fee schedule
List of charges for the various procedures a physician performs
What types of codes appear on office itemized charge slips?
- Diagnosis and procedure codes
How would you find the usual charge for a procedure?
by looking on the fee schedule or it would automatically be in the system
Define debit
a posting that is added to an account balance
Does a debit increase or decrease the amount a patient owes?
- Increases the amount a patient owes
Define day sheet (daily journal)-
Keeps a running tally of the practice’s income for that day and is a record of daily transactions
How are transactions recorded on the day sheet?
chronological order
What is created at the same time if a manual day sheet is used?
Itemization slip for the bank deposit
Define proof of posting and where will you see it? What is its function?
- Will see it with the pegboard system or write it once system
- A method to verify correct arithmetic of columns
What does it mean to “close the day”?
- The day sheet is printed at the end of the day and the day is closed so that no additional accounts receivable charges or entries can be entered using that date
Define the accrual method of accounting-
accounting method in which income is entered at the time of the sale or provision of service
What is a money market account? How do they compare with checking accounts? Can you give examples of things that might be paid out of this type of account?
- Require high minimum balances and earn interest at the money market rate. Lets the owner draw a specified number of checks per month without a processing fee. Checks often have to be at least $500.
- Ex: Quarterly, semiannual, and annual payments for malpractice insurance; licenses for physicians and other licensed professionals on staff; dues to the state/county/local medical association or chamber of commerce
Define payee
the person to whom a check is made out to
Define cashier’s check; Whom is the check drawn on? Why do we use a cashier’s check? Can you give examples of what it might be used for?
- Check drawn on the bank itself rather than on an individual account
- Cashiers checks are considered more reliable than the check of an individual business
- Ex: Office is purchasing a large piece of equipment and the seller won’t accept a business check
Define ABA routing number; who assigns the number?
- unique number
- issued by the American Banking Association to identify the bank
When preparing a bank deposit slip, what should be included from each check on the deposit itemization record?
- Check number and amount
What does MICR stand for? What is included in this line?
- magnetic ink recognition system
- ABA routing number, the account number, and the check number
What determines the legal amount of money to be drawn on a check?-
- The amount written in words
Define Pegboard system for check writing, specifically when used to pay bills information about each check should be recorded simultaneously on what?
- Created when visit is recorded
- Bank deposit slip
Can you tell me how to prepare a bank deposit slip? What do you include on it?
- Total cash being deposited written on cash line
- Total of the checks on the check line
- Itemized list of checks must be included
- Numerator of fractional bank number should be entered in the boxes to the left
How often should a bank deposit usually be made?
Sometimes daily, but often 2-3 times a week
Define blank endorsement
signature of the party to whom the check was written. Can be cashed by anyone holding the check
Define special endorsement
statement of the party to whom a check should be paid followed by the signature of the party to whom the check was written
Define restrictive endorsement
Instructions of how the check can be paid out, followed by signature of the party to whom the check was written
Which type of endorsement should be used for checks that are received by the medical facility?
Restrictive endorsement should be used
What does it mean to reconcile a bank statement?
- Making sure that the balance in the checkbook and the balance on bank statement equal eachother after adjusting for checks that were written but not yet cleared through the bank and deposits recorded after the statement period ended
List reasons why the bank statement may not agree with the office record for a checking account-
There may be outstanding checks
There may be recent deposits
There may be bank fees
There may be interest
What is a petty cash account and what types of things are paid from it?
The cash kept on hand to pay for small, miscellaneous items, such as tips for a delivery, postage due, reimbursement to a staff member for parking at a meeting, or box of girl scout cookies for the office break room
