Generally Accepted Accounting Principles Stephanie R. Stewart HCS/571 September 24, 2012 Anne Harney Finlon Generally Accepted Accounting Principles Generally Accepted Accounting Principles (GAAP) are important ideas to understand when discussing finances of any kind. It is important for all nurses, especially those in management roles, to understand financial concepts and be involved in the budgetary process. This paper will help to create an understanding of GAAP, the purpose of the principles, and how they relate to the health care industry today. Every profession tends to have a language specific to the profession or occupation. The financial world is not immune to this language subset. The term Generally Accepted …show more content…
This specific concept examines the likelihood of whether the entity will still be operating tomorrow, next month, or next year. The reason for examining this information is due to the value of organizational assets (Finkler, Kovner, & Jones, 2007). Assets of a company that is not expected to be in business next month will have a different value than the assets of a company expected to be in business for many years to come. For example, the value of the building where Shady Acres Nursing Home operates may be worth far less if it is known the facility will be ceasing operation in a few weeks. The next tenet of GAAP is the matching principle and cash vs. accrual accounting. As discussed by Finkler, Kovner, and Jones (2007), payment for services rendered is not always received in the same year. Additionally, the cost of providing those services may also not be noted as paid in that same year. Inconsistencies can occur as a result of the timing of income and expenses towards the end of a financial year. This GAAP rule helps to create consistency by requiring income and expenses to be reported in the same year. An instance of this rule is when Shady Acres provides skilled nursing care to Mrs. Smith for the month of December 2012. Though it is unlikely that Mrs. Smith's insurance will pay Shady Acres any sooner than January 2013, the accountants at the nursing home must show that the income was received in 2012. Additionally, the
Carry Yoki’s Lounge consists of the following. Carry, the owner believed that people would come to hear a band play on Friday, Saturday, and Sunday evening. During the remainder of the week, she believed her customers would watch sporting events on several television sets located throughout the lounge. Carry employed two bartenders, three servers, two assistant servers, two cooks, one dishwasher and a clean-up person. She had a bar, 15 barstools, 4 tables, 40 chairs, 4 television sets, and one satellite dish. She had an oven, stove, grill, refrigerator, sinks, dishes, and glassware. Carry started this business with $50,000 of her own money, and she borrowed $150,000 from the bank. From this
If some research is undertaken that provides evidence that capital markets do not always behave in accordance with the Efficient Market Hypothesis, does this invalidate research that adopts an assumption that capital markets are efficient?
The company dose not use a third party designee and the tax returns are signed by the president, Carlos Cruz.
The Report describes a proposal for the group of 20 of doctors with regard to the creating a hospital. Due to the 500,000 population of the city $100 million dollars would actually be a great start. Because the facility would be located 30 miles from the downtown area it would allow the facility to attract patients without being crowded. On the downside this affects its financial position and market condition because of distance. A lot of patients are not able to get to the doctor due to the high gas prices. Using various strategies, such as looking into ways to connect with public transportation to deal with this problem and gain
Generally accepted accounting principles (GAAP) allow companies wide latitude in the choice of accounting policies. After a firm chooses a set of accounting policies, current accounting rules permit changes from one alternative policy to another at the discretion of the management. Since reported accounting figures are widely used by a number of external parties, managers of firms have incentives to choose accounting policies in order to influence the behavior of these parties. A variety of managerial motives for
Student Cases with Solutions to accompany Accounting & Auditing Research: Tools & Strategies (7th edition)
During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company’s
In addition to delivering health care of the highest quality, another main goal of a health care organization is to remain profitable and viable through effective financial management. In an effort to do so, members of administration along with the Chief Financial Officer (CFO) work diligently in attempting to maintain and sustain a successful health care organization by monitoring the flow of cash (in and out) in accordance to GAAP (Generally Accepted Accounting Principles), while ensuring the needs and wants of the consumers are met. With this being the case, health care accounting skills are equally important in
At the end of 2011, retained earnings for the Bisk Company was $1,750. Revenue earned by the company in 2011 was $2,000, expenses paid during the period were $1,100, and dividends paid during the period were $500. Based on this information alone, retained earnings at the beginning of 2011 was
What is the future value of $7,540 at the end of 7 periods at 8% compounded interest?
A little over a year ago I was at a loss for what I wanted to do when I graduated. I had contemplated going into the legal field as a paralegal but that job would not give me the chance to be creative. Then I had this big idea that I should go to school to be a dietician but the only problem was that science was my weakest subject.
1. The reason economists and accountants have problems using cost analysis in the real world is that
GAAP is exceptionally useful because it attempts to regulate and normalize accounting definitions, assumptions, and methods. Because of generally accepted accounting principles one is able to presuppose that there is uniformity from year to year in the methods that are used to prepare a
1. A brief history of the two organisations, and their objectives, in as far as they
Corporations are often the victims of the most common white-collar crimes that occur in corporate America. According to the Association of Certified Fraud Examiners (cfenet.com), “abuse and fraud by employees cost U.S. organizations more than $400 billion annually…[which equals] $9 per employee per day.”