By Steven A. Finkler
Accounting basics for wellbeing and fitness Care administration is the perfect textual content for an introductory path in monetary administration in either undergraduate and graduate courses. As so much classes specialize in easy accounting, this can be the 1st publication that specializes in simple accounting. All instance and purposes during this ebook are particular to the sphere of future health care. This e-book is a vital for somebody with a division and the cheap.
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Qxd 2/6/06 9:47 AM Page 25 Chapter 4: Introduction to the Key Financial Statements 25 NOTES TO FINANCIAL STATEMENTS—WHAT DO THE FINANCIAL STATEMENTS REALLY MEAN? As you continue to read this book, you will find that the accounting numbers don’t always tell the entire story. For a variety of reasons, financial statements tend to be inadequate to fully convey the results of operations and the financial position of the organization. As a result, accountants require that notes be provided to supplement the financial statements discussed.
Your old car is no longer new and so its value has gone down with age. Because the car is 3 years old, and generally cars are expected to have a 5-year useful life, your car has lost 60% of its value, so it’s only worth $10,000. However, because of inflation, you could sell the car for $15,000 and you’d have to pay $18,000 to buy it on a used car lot. What is the value of your car? Is it $25,000, $28,000, $10,000, $15,000, or $18,000? Obviously valuation is a complex issue. This chapter looks at how accountants value assets, liabilities, and stockholders’ equity for inclusion in financial statements.
Fortunately, debits and credits are simply bookkeeping tools, and you don’t need to use them extensively to understand the concepts of accounting and finance. RECORDING THE FINANCIAL EVENTS Now we are going to work through an example in which we actually record a series of transactions for a hypothetical health care organization, Healthy Hospital, for 2007. The purpose of this example is to give you a feel for the way that financial information is recorded, and to show the process by which millions of transactions occurring during a year can be summarized into several pages of financial statements.