School of Health Science HA240: Medical Office Accounting Week 4 Seminar

School of Health ScienceSchool of Health Science

HA240: Medical Office HA240: Medical Office AccountingAccounting

Week 4 SeminarWeek 4 Seminar


Week 4 SeminarWeek 4 Seminar In this week’s seminar we will cover:

The four kinds of information that the financial records of any business should show

The difference between accounts payable and accounts receivable

The three most common bookkeeping systems found in physicians’ office today.

The importance of a trial balance. Maintaining a petty cash fund Looking forward to Unit 5 Conclusion


Financial Record InformationFinancial Record Information Financial records of any business should show the

following: How much was earned in a given period How much was collected How much is owed The distribution of expenses occurred

Periodic financial reviews can provide: Improved business practices Better management of time Curtailment or elimination of unprofitable services Better budgeting of expenses

Remember it is important to: Use good penmanship Use the same pen and ink style consistently Keep columns of figures straight Write well-formed figures Carry decimal points correctly


Accounts Payable and Accounts Payable and Accounts ReceivablesAccounts Receivables

Accounts Payable: List of debts currently owed by a person or business.

These are debts incurred mainly for the purchase of services, inventory, and supplies. The accounts normally do not include accrued salaries payable, accrued interest payable, or rent payable. This list is kept in the ordinary course of the organization’s business

Accounts Receivable: List of money owed on current accounts to an

organization, which is kept in the normal course of the organization’s business and represents unsettled claims and transactions. Accounts receivable normally arise from the sale of a company’s products or services to its customers.


Accounts Payable ProceduresAccounts Payable Procedures Accounts Payable Procedures

Invoices and statements Invoices describe the items purchased and show the

amount due Place invoices in a consistent place until they are paid Some vendors require payment from invoice Other vendors send monthly statements

Paying for Purchases Compare statements with invoices for accuracy Fasten the statement and invoice together Write the date and check number on the statement Mail the check File the invoice and statement


Accounts Receivable ExampleAccounts Receivable Example Balancing End-of-Month Accounts

Receivable Accounts receivable at first of month _____ Plus total charges for month _____

Subtotal _____ Less total payments for month _____

Subtotal ______ Less total adjustments for month _____ Accounts receivable at end of month _____


Financial RecordsFinancial Records Accountants often use different types of means

to record the organization’s financial transactions

Some Examples: Daily journal

The chronologic record of the practice The financial diary All information regarding services rendered, charges,

and receipts is recorded in the daily journal All transactions must be recorded

Checkbook Receipts are deposited into checking accounts Keep records of each deposit Bills are paid by check, through use of online payment

services, or through automatic withdrawals


Common Bookkeeping SystemsCommon Bookkeeping Systems Single-Entry System, Double Entry System and Peg Board

System Single Entry System

Oldest and simplest method for keeping records Includes three basic records:

general journal, cash payment journal, and accounts receivable ledger Drawbacks of Single-Entry Systems

Errors are not easily detected, no built-in controls and periodic analyses are inadequate for financial planning

Double Entry System Includes the same basic journals as a single-entry system May include numerous subsidiary journals Most complete of all systems and provides most comprehensive view

Peg Board System Most commonly used manual method of accounting in the physician’s

office Computer programs are similar to pegboard systems


Trial Balance and Petty CashTrial Balance and Petty Cash Trial Balance is the method of checking the

accuracy of accounts Obtaining the Trial Balance

Pull the account cards that have a balance due. Enter each balance on the calculator Total the figures Amount should equal the accounts receivable balance

figure on the control Petty Cash

Petty cash is used to pay minor expenses A total of $25 to $50 is usually sufficient for the office Bills should be paid by writing checks or via online

services instead of using petty cash, even if a bill is small Money should be in a cash drawer that can be kept

locked Only one person should be in charge of petty cash All money should be accounted for at all times


Looking Forward to Unit 5Looking Forward to Unit 5 As we move forward to Unit 5, we will start to look at the

personal side of the profession We will discuss values that are considered in determining

professional fees. We will learn to distinguish among the terms usual,

customary, and reasonable. We will discuss the value of estimates for patient

treatment. We will learn the ways by which payment for medical

service is accomplished. And finally, we will discuss the concept of professional

courtesy.


ConclusionConclusion It is important to know and understand

what information needs to be included in an organization’s financial records at all times

Remember the differences between accounts payable and receivables

Know the differences, advantages and drawbacks of each bookkeeping type

Make sure to keep an accurate trial balance Keep up with petty cash

Documents

School of Health Science HA240: Medical Office Accounting Week 4 Seminar