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PowerPoint® to accompany
Second Edition
Ramutkowski Booth Pugh Thompson Whicker
Copyright © The McGraw-Hill Companies, Inc. Permission required for reproduction or display.
Medical AssistingChapter 18
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Objectives18-1 Describe traditional bookkeeping system, including single
entry and double entry.18-2 Define a pegboard system.18-3 Explain the benefits of performing bookkeeping tasks on the
computer.18-4 List banking tasks in a medical office.18-5 Describe the logistics of accepting, endorsing, and
depositing checks from patients and insurance companies.18-6 Reconcile the office’s bank statements.18-7 Give several examples of disbursements.
Accounting for the Medical Office
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Objectives18-8 Record disbursements in a disbursement journal. 18-9 Set up and maintain a petty cash fund.18-10 Create employee payroll information sheets.18-11 Compute an employee’s gross earnings, total
deductions, and net earnings. 18-12 Prepare an employee earnings record and payroll register.18-13 Set up the practice’s tax liability accounts.18-14 Complete federal, state, and local tax forms. 18-15 Submit employment taxes to government agencies.18-16 Describe the basic parts of an employment contract.
Accounting for the Medical Office
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Introduction Bookkeeping
Systematic record of business transactions.
You need an understanding of basic accounting system and certain financial management skills.
A medical practice is a business, its income must exceed its expenses!
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Establishing Procedures Maintain the practice’s
bookkeeping. Be consistent. Use check marks as you
work to avoid errors. Write clearly with same
type of pen. Double check your
work frequently.
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Bookkeeping Systems Single entry system
Daily log Patient ledger cards Checkbook registers Payroll records Petty cash
Double-entry Assets – goods or
services Liabilities – amounts
owed by the practice Both sides of the
accounting equation must balance
Assets = liabilities + owner equity
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Pegboard System Each transaction on four different forms Reduces errors and saves time Called “one-write” system Uses lightweight board with pegs
Daily log sheets Patient ledger card Charge slips Deposit slips
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Pegboard Processes1. At start of day 2. Upon patient arrival 3. Attaching the charge slip4. Before the patient leaves5. Payments after the patient
visit6. End of day
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Bookkeeping On the Computer Benefits
• Saves time• Performs mathematic calculation• Software for taxes, calculating liabilities
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Banking for the Medical Office Banking tasks
Writing checks Accepting checks Endorsing checks Making deposits Reconciling bank
statements
Keep all bank materials secure because they represent the finances of the practice.
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Checks A bank draft or order for
payment. Person who writes the
check is payer A check must:
Be written and signed Include amount to be paid Be made payable to payee Be made payable on demand Include the name of the
bank that is directed to make payment.
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Other Negotiable Papers Cashier Check
Check issued on bank paper and signed by bank representative.
Certified check Payer’s check written and signed by a payer
and stamped “certified” by the bank Money order
Certificate of guaranteed payment
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Check Codes American Banking
Association (ABA) number Appears as a fraction 60-117/310
Magnetic ink character (MICR) code Numbers and
characters at the bottom of check
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Types of Checking Accounts Personal accounts
Physician personal account for private financial matters
Business accounts For office expenses
Interest-earning account Used for paying special expenses such as taxes.
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Accepting Checks Check for:
Correct date Correct amount Signature
Do not accept third-party check. One made out to the patient rather than the practice.
Do not accept a check marked “Payment in Full”unless it actually does pay the complete outstanding balance.
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Endorsing Checks Write the name of the doctor
or practice on the back Include “For Deposit Only” Add bank account number. Use ink or rubber stamp Place endorsement in the 1.5
inch area on the back of check.
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Completing the Deposit Slip Post the payment to the patient ledger card Put the check with others to be deposited Fill out a deposit slip Account number is printed on deposit slips in
MICR numbers that match those on check Can include computer printed list of checks if
you include a deposit slip
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Making the Deposit Plan to make deposits in person Avoid sending cash through the mail Obtain deposit receipt May have to make deposits daily
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Reconciling Bank Statements Compare the office’s financial records with
the bank records to ensure they are consistent. Must be done once a month Be sure all checks written are the same and all
checks deposited match on both records.
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Electronic Banking Basic tasks will be the same as in an office
that uses traditional banking methods You are still responsible for recording and
depositing checks Computer software will:
Calculate new balance Reconciling the office bank statement Use computer password for security
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Apply Your Knowledge What are three things should you add to
the back of a check that you receive from a patient?
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Apply Your Knowledge -AnswerAnswer
What are three things should you add to the back of a check that you receive from a patient?
1. Name of the doctor or practice2. “For Deposit Only”3. Bank account number
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Features of Banking Software Records deposits Pays bills Displays
checkbook Balances
checkbook
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Managing Accounts Payable Payments for supplies,
equipment, and practice-related products and services
Payroll Taxes
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Managing Disbursements Managing supplies
Usually one person handles purchasing
Combine orders if possible Follow practice purchasing
guidelines Buy from reputable supplies Get the best quality and the
amount for which insurance companies will reimburse
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Writing ChecksMake sure the checking account balance will cover the check you will write
If you make an error when completing a check, write void in ink across the front of the check
Have the doctor sign the check and the invoice.
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Types of ChecksVoucher checks
Standard checkbookCashier’s check
Purchased from a bank and signed by the bank officialCounter check
Allows depositor to withdraw funds from her account only
Traveler’s checks Used when traveling instead of carrying large amounts
of cash.
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Recording Disbursement Give each column a
heading Record each check in
appropriate columns Determine expense
category of the check Record the check
amount
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Managing Petty Cash To avoid writing checks for such small amounts use
petty cash funds Usually $50.00 Write a check to “petty cash” Enter the check in the miscellaneous column of
disbursement records Get a petty cash voucher when money is removed. Replace money once a month to keep amount at
$50.00.
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Understanding Financial Summaries Statement of Income
and expense Profit and loss statement
Cash flow statement Money available to
cover expenses Trail Balance
Combined expense column total equal to total check amount column
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Handling Payroll Obtaining tax ID
number Creating employee
payroll information sheets
Calculating employees’ earnings
Subtracting taxes and other deductions
Writing paychecks Creating employee
earnings records Preparing a payroll
register Submitting payroll
taxes
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Handling Payroll Electronically Create, update, and
delete employee payroll information files
Prepare employee paychecks, stubs and W-2 forms
Update and print employee earnings records
Update all appropriate bookkeeping records, such as payroll ledger and general ledger with payroll data.
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Taxes Calculating and filing
taxes Setting up tax liability
accounts Understanding federal
tax deposit schedules Submitting federal
income and FICA taxes Submitting FUTA
taxesClick for Larger View
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More Taxes Filing an employer’s
quarterly federal tax return
Handling state and local income taxes
Filing wage and tax statements
W-2 W-3 Transmittal of wages Tax statements
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Managing Contracts A written agreement of
employment terms between employer and employee. Include names and
addresses Considerations Starting and ending
dates Signatures of both
parties
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Medical Assistant Contract Includes:
Description of your duties and your employer’s duties
Plans for handling major changes in job duties Salary, bonuses, and other compensation Benefits Grievance procedures Termination procedures
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Apply Your Knowledge What is a W-2?
What is FUTA?
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Apply Your Knowledge -AnswerAnswer
What is a W-2? Shows the employee’s total taxable income for the year.
What is FUTA? Annual Federal Unemployment Tax Return
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Summary Medical Assistant You will need to understand the proper
management of accounts receivable and accounts payable.
The use of standard bookkeeping and banking procedures is necessary to maintain the business of
the office.
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End of Chapter
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