Health Care Business
June 29, 2015
Health Care Business Analysis
In creating a new operating budget a decision had to consider the type of budget that would best fit the needs of the hospital. Since there is several financial management practices involved with creating an operating budget, we must understand which practice will help us create a budget that is substantial for the needs of Patton Fuller Community Hospital. The Patton Fuller Community Hospital Nursing Statistics provided information including cost of nurse per hour, cost of nurse per 24 hour day, number of nurses per patient, number of nurses per day, nursing cost per day, and nursing cost ...view middle of the document...
Accounting is used to create budgets and keep track of the business or organization assets. Managerial accounting provides information to managers and the managers are the people that work within the business and direct and have control over the many functions of the business. Managerial accounting provides essential data about the functions within the business. The reports that are provided by the managerial accountants focus on the performance of the business and the business environment. Managerial accounting is manager oriented and managerial accounting focus on the accounting duties of a manager. Managerial accounting is used on a day to day operation providing an analysis of cost and the cost benefits. Managerial accounting function as a source for the business developments and the capital budgeting. The primary concern with managerial accounting is to provide positive outcomes in the business production and the profit.
The financial management aspect focus on providing the necessary information to the stockholders, stakeholders, and creditors are outside the business. Financial management generates reports and statistics about the business financial health and well being. The financial management enables stockholders to view his or her investments and see how well the investment in progressing. The financial management tools also give future stockholders the opportunity to make future decisions.
The list of seven rules is a very clear guide for the truest financial reporting. The first rule is going concern. This states that financial documents are created and read with the idea that a company is not going bankrupt. “Financial statements are prepared based on the assumption that the organization will remain in business for the foreseeable future. If that is not likely to be the case, it must be disclosed,” (Finkler, 2006). The next rule is Conservatism. This rule can compete with other rules. This rule states that all potential risks should be taken into account when recording financial information and forecasting the future financial state. Matching indicates that revenues and expenses should be matched and recorded in their indicated time frame. Cost is a very simple concept. “The value of what was given up to acquire the item,” (Finkler, 2006).
Materiality is the rule that indicates errors are material when they would change the decision that an investor or other stakeholder might make regarding the organization. Consistency is the rule that states the style of accounting used throughout the financial documents is consistent. Full disclosure is a catch all rule. It states that anything that has yet to be reported needs to be recorded. This is a way to ensure that all financial reports are a fair representation of the financial state of the organization.
Financial reporting and accounting in any industry is difficult but is especially challenging in health care. Fund accounting is often used in...