WELCOME TO SEMINAR 4

HS 240

To Begin..

• Review

– Last week’s performance

– The Accounting Equation, Debit vs. Credit, and Journalizing Transactions

• Questions from last week’s material

Overview

• Accounting Equation– Assets = Liabilities + Net Assets

• Recording Financial Events

– Double entry transaction recording• Debit• Credit• Using T Accounts

– Chart of Accounts

• Ledgers

• Financial Statements

Financial Statements

• Assets = Liabilities + Net Assets

• Assets– To increase: Debit– To decrease: Credit

• Liabilities– To increase: Credit– To decrease: Debit

• Net Assets– To increase: Credit– To decrease: Debit

Financial Summaries and Records

• Financial Summaries– How much was earned in a given period.– How much was collected.– How much is owed.– The distribution of expenses incurred.

• Transactions • Double Entry System vs. Single Entry System

• Financial Records– Daily Journal– Checkbook– Disbursement Journal– Petty Cash Records– Payroll Records

Recording Transactions

• Single Entry System– Pros and Cons

• Double Entry System

• T-Accounts Cash A/P

Dr Cr Dr Cr + - - +

• Pegboard or Write-It-Once System

Applications

• Missing Checks

• Petty Cash

• Recording Errors

Financial Statements

• Trial Balances– Accounts Receivable

• Accounts Payable Summary– Paying for Purchase (Cash or Charge)

– Recording Disbursements

• Petty Cash Funds

• Payroll Forms and Summaries

Applications

• $150 Invoice for Supplies

• Purchased Building for $2,000,000

• Paid $600 for Semi-Annual Fire Insurance

• Paid $50 out of Petty Cash for Pizza

Recording Transactions

• Ledger Accounts

– Classified under the equationAssets+Expenses = Liabilities+Net Assets+Revenue

– Uses the double entry system

Beginning Balance +/- Transactions Ending Balance

Example

AssetsCash

ExpensesInventory

LiabilitiesA/P

Net AssetsUnrestricted

Revenue

BI 20,000 0 500 2000 0

T1 -500 1000 500

T2 Record a payment for Inventory payment on account.

EI 10,000 1000 0 2000 0

From the information provided, what do you think T2 would be?

Financial Statements

• Operating Statement (Statement of Income and Expenses)

• Revenue (Beginning Total)

– Less Expenses (List of paid bills)• Total your list of expenses

• = Increase or Decrease in Net Assets

• R – E = Increase or Decrease in NA

Financial Statements

• Trial Balance

• Balance of all the Patient Accounts– Pull all the balances for the beginning of the

month– Add total charges for the month– Subtract total payments from patients,

insurance carriers, etc. for the month– Equals accounts receivable for the end of the

month.

Financial Statement

• Statement of Cash Flows– Where the cash originates from and where it is

applied.

• Examples of Practice– Operating Activities– Investing Activities– Financial Activities

• Note: Cash balance on Balance Sheet must equal the ending cash balance on Statement of Cash Flows

Exercise

• Revenue from patient A: $25.00

• Revenue from patient B: $50.00

• Write-Off from insurance carrier for patient A: $250.00

• Office Visit Charge for patient B: $300.00

• Beginning Balance Patient A: $200.00• Beginning Balance Patient B: $325.00

What is accounts receivable for the end of the month?

Summary

• Accounting Equation

• Changes in the Accounting Equation

• T-Accounts

• Debit vs. Credit

• Transactions

Payroll

• Payroll Forms– W-4– W-2– SS-4

• Income Tax Withholding of Employer– Employer responsible for estimates

• Income Tax Withholding of Employee– Employee responsible

Payroll

• Social Security, Medicate and other Taxes– Employer

• Medicare• Medicaid

– Employee• Medicare

• Medicaid

• State and Local Taxes

– Tax forms• Form 941: Quarterly Federal Tax Return

• Form 940: Employer’s Annual Federal Unemployment Tax Return

• W-2• W-3

Budgets

• Fiscal Year Basis

• Budget Designs– Budget– Actual– Differences– Accounts to Include

Summary

• Financial Summaries and Statements

• Financial Records

• Record Keeping Systems

• Payroll

Conclusion

• Never hesitate to contact me on AIM during office hours, or by my Kaplan email.– AIM: drtlbolling– tbolling@kaplan.edu

• Any final questions or thoughts?