By Steven A. Finkler
Accounting basics for future health Care administration is the right textual content for an introductory path in monetary administration in either undergraduate and graduate courses. As so much classes specialize in simple accounting, this can be the 1st e-book that specializes in uncomplicated accounting. All instance and functions during this ebook are particular to the sector of wellbeing and fitness care. This e-book is a vital for an individual with a division and the cheap.
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Qxd 2/6/06 9:48 AM Page 40 40 ACCOUNTING FUNDAMENTALS FOR HEALTH CARE MANAGEMENT The total of all numbers in the Dr. column must equal the total of all numbers in the Cr. column, or the fundamental equation of accounting is not in balance. In the example that follows, we indicate the impact of each transaction on the fundamental equation of accounting and then show how it appears in journal entry form. Healthy Hospital 2008 Financial Events 1. January 2. Purchased a 3-year fire insurance policy for $6,000.
Such a reduction is a credit. Therefore, receipt of a debit memo from another organization would cause you to record a credit on your books or financial records. Consider returning merchandise to a store. The store issues you a credit memo. From the store’s point of view, it now owes you money for the returned item. The store’s liability has risen so it has a credit. From your point of view, you have a receivable from that store; receivables are assets. Thus you have an increase in an asset, or a debit.
6,000 Cr. $6,000 2. January 18. The hospital mails a check to its supplier for $30,000 of the $34,000 it owed them at the end of last year. ) This requires a journal entry showing a decrease in the cash balance and a reduction in the A/P liability to our supplier. ∆A + ∆E = ∆L Cash - 30,000 Accounts Payable Cash + ∆R = A/P - 30,000 Dr. $30,000 Cr. $30,000 Notice that when we look at the impact on the equation, both cash and accounts payable are negative numbers; each decreases by $30,000. In the journal entry format, negative signs are never needed or used.