Finance Flashcards
What are two ways of normalizing revenue and expenses when creating a budget (Multiple Choice)?
Average the last 3 years; remove non recurring items from the previous year
Chart of Accounts
Systemic listing of all account names and numbers used by a company. It is recommended that practices include on the chart of accounts only those they use in the normal course of business.
Profit and Loss Statement
A core financial report showing income and expenses in a specific period of time.
Balance Sheet
a statement of the financial condition of the practicing listing assets, liabilities and owners equity. It is measured at a specific point in time only. Snapshot of the value of a business.
Cash flow Statements
shows where cash in the practice comes from
Net Income
Profit. Subtract expenses from revenue. Ave net income in GP is 10-12%
Intangible Property
Non Physical property that has value. coopyrights, good will, non compete agreements
Assets
Everything of value owned by the practice; Current are items consumed with a year; Fixed or Long Term Assets extend longer than a year
Liabilities
Practice debts, loans, mortgage, AP
Equity
Assets - liability; the net worth of the practice
COGS
Products used to provide a service or sold to clients
Cash Based Accounting
Recognizes revenue when cash is received and expenses are paid; allows clear day to day picture; important when running on a cash-based system that expenses are paid timely to avoid overstating net income
Accrual Based Accounting
Recognizes revenue when it is earned and expenses when they are incurred;
What does the AR turnover calculation tell us?
How many times the AR balance is converted to cash; How efficient a company is at collecting its credit sales from customers.
What is the formula for AR Turnover Calculation?
Credit extended / Average Accounts Receivable = Accounts Receivable Turnover
Calculation for Average AR
Beginning AR+Ending AR/2= Average AR
Days in AR - formula
Number of Days in Period/ AR turnover = Days in AR
What are some alternatives to extending credit?
Pet Insurance; Outside lenders- CareCredit; Held CC Payments with agreement; Wellness and Preventive Care Packages-
What info does a Collection Agency need to collect a debt?
Client Name, Address, Phone Numbers (all)
Total Balance due on Account
Client’s occupation if known
Clients employment address
Clients DL #
Copy of Client info sheet and signature of client guaranteeing payment for services rendered
Employee AR collection
Mandatory monthly payments are expected; Dont allow a balance to exceed $100; Managers must have documentation that employee authorizes any payroll deduction; cannot bring wage below min wage.
Collection Letters
Sent 30/60/90 days past due
Keep short, brief, firm, polite; date, amount and info correct; response date; date of collections; thank you
Collection Phone Calls
Call blocker? counsel team not to take negativity personally; keep convo focused on account; team members should introduce themself, confirm who they are speaking to; never leave vm w details; id practice, caller and phone number; document all convo in the record
Fair Debt Collection Practices Act
Regulates collection procedures; protects public from unethical collection procedures; debtors cannot be subject to harrassment; oppressive tacts; abusive treatment; cannot make false statements; cannot call employer if either objects; cannot call before 8 or after 9; only give details to client themselves
AR Collection Processes
paid within 30 days; software should age accounts 0-30, 31-60 , 61-90 and over 90 days; statement sent immediately after services are performed; collections increase when service is recent
