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Ramutkowski Booth Pugh Thompson Whicker

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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