Accumulated depreciationis the one of the methods used forfinancialand accounting purposes by organization to depreciate fixed assets.The amount of reduction is higher during the earlier years of anasset’s life. The depreciation expense incurred can accuratelyrepresent the usefulness of an asset being used up within aparticularfiscal period. For tax purposes, it provides a way ofdeferring corporate income taxes. When reporting, two primary methodsof accelerated depreciation thus the double declining balanceand the sum-of-the-years’ digits methods. Amortizationdetermines the number of years over which the property shoulddepreciate. Thereduction works as a form of debt-free leverage, byessentially requesting money,which is tax-free and risk-free, fromthe government. In this case there is no enough prove thataccelerated depreciation enhances higher overall tax revenue for thegovernment.Hence, it brings about the idea that the current moneyavailable is worth more than the sameequal amount in the future dueto its potential earning capacity. Thisprinciple of finance holdsthat, as long as money can earn interest, anygiven any amount isworth more as soon as it gets received.That is what fundamentallyexplains the relationship between the time value of money and theaccumulated depreciation methods. Essentially the accumulateddepreciation one has to defer the cost of an asset being depreciated,and time value of money looks at the future value of an investmentcompared to its present economic benefit.
Throughout the history, medical institutions have largely beennonprofit making organizationsestablished to serve the community. Theethical implications of the upcoming health care have become a matterof heated controversy. There have been an increased role forentrepreneurs and opportunity in the provision of health careservicesenhancing a more efficient and effective health care system.Commercialization of health care is in acceptable bythose who argueon considerations of justice. Arguing it’s the institutionobligation to meet the society health needs.
Research on growth of for-profits decreases the availability ofhealth care for the less fortune. For-profits, by refusing to servenonpaying patients it’s have brought about a significant burden tothe nonprofits with more of the poor to help,but with lower payingpatients to subsidize their cost of care.That has increaseddifficulty for non-profits to continue to serve those who can`t pay.In fairness, hospitals should take the obligation to servesociety`sneed. However by not taking their fair share of unprofitablepatients.It is unfairthat the costs of serving the patients shouldlean more heavily on nonprofit making health cares. To add on thatmedical treatment and to counsel lacking profit potential, howevereffective, will bediscouraged. A system of for-profit health care,chances for patient manipulation and exploitation are endless.Placing the well-being of patients to risk, and undermining the trustis essential to the physician-patient relationship.
Nonprofit hospitals undertake costly maintenance servicesthatare notuneconomical, but which provide doctors with the experiencesnecessary to medical education. Itis necessary, but expensive,research and services essential to medical education will go aside.For-profit hospitals to take over the health care sector, societywill suffer an acute shortage of unprofitable, but critical such asemergency rooms. Scarce resources will be used to producemarketlucratively, but unnecessary services such as cosmetic surgery.
As it is emphasized by the accounting policies,it is a requirementto follow the nine universally accepted steps of the accountingcycle.Hence, essential for the accountants to formulate accurate andreliable financial report for the users. This stepindeed tries topromote the fundamental accounting equation by restricting theaccountants from business in their financial reports. It’s usuallyclear that for an accounting period to be successful, Identificationof transactions must be carried out. In that transactions arerecorded as per the date of occurrence.Thatenhances theidentification of an event on whether it is a liability or asset tothe companythat is very much relevant for the comparison to work.Secondly the accountant should be in a position to analyzetransaction as recorded in the books of accounts. It helps todetermine the purchaseamount,which accounts to be affected and inwhat ways. Hence, one gets into a position of determining theeffectiveness of the operation on the firm either being an obligationto the company or taking the direction of increasing the firms stockas an asset. The transactions are then posted to journal entries thateventually determine the accounts that the transaction affects andhence matching the revenue generated with the expenses incurred togenerate them to balance the equation. The entries are then posted toledger accounts as per the double entry and then balanced todetermine the closing balances of each account. The balances that arethen posted to the trial are a summary of what is in the complicatedaccounts and therefore gives a glimpse of the transactions. The trialbalance shows any errors that may have occurred in either thecomputations or the posting of transactions. If errors are found tohave occurred, they are rectified so as to come up with an adjustedtrial balance. This final trial balance is put to use in thepreparation of the final financial statements which determines theamount of assets and liabilities owned by the company by help oftrialbalance. The accounts are then closed by transferring them toatemporary account after which a final trial balance is drawn havingfixed the major accounting equation.
With efficiency ratio benchmarking, it shows how efficiently thebody uses its resources. That is done to try and assess the riskahead by identifying the strength and weaknesses the organization.For one to select a survey, he or she has to use a benchmark so as toreclassify the entity’s income and expense accounts. Then, assignthem to the selected structure after which one calculates variancefrom the industry norms. Withactivemoneymanagement for health careorganizations also involves the categorizing of revenue and expensesfor the hospitals profitability. Adequate working capital will alsopromote reduced holding of current assets by the hospitals. As inefficiency ratio,the idea of identifying strengths and weaknesses isalso used in practical working in that the groupincludes themanagement of working capital reconciling payables and receivables todetermine the financial position. Both the efficiency ratio andworking capital tries to improve thepatient`ssafety,patientsatisfaction, DRG utilization and above allthe health care quality. All in all, efficiency ratio to be used itneeds a follow up of the process below
1. Adjusting of operating expenses and capital items.
2. Adjusting to cost of equity or the discount rate.
3. Selecting of discounts and premiums based on thevaluesought.
4. Finally,select multiples and ratios.
With that one is a position to enhance efficiency ratio for healthcare and active working capital to facilitate quality management ofhealth care organizations.
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