Hca 270 Week 2 Checkpoint

There will always be financial matters or accounting procedures in the running of a small or large business because it is important part of any business. Practices and principles of accounting are the heart of financial management. The three practices used in health care organizations are accrual accounting, cash flow accounting, and fund accounting. It's very important and necessary to understand accounting practices. In addition, it is also important to understand how entries can be made and items are recorded. Accountants and auditors help to ensure that the nations firms are running efficiently, it is public records kept accurately, and its taxes paid properly and on time (Bureau of Labor Statistics, 2009).

Accrual accounting are sales and expenses transactions are reported when they happen even if money does or does not occur at the time of sale. Inventory is recorded or posted to a journal even if the individual has not paid for the inventory. In accrual accounting value of assets are affected by the choice of depreciation method, assets do not last forever. Depreciation in accrual accounting reduces the recorded book value of the assets every year. Example would be just like when an individual car depreciates a little every year and very similar to how the value of the individuals car goes down the longer he or she has it. Be aware that depreciation is a non cash expense, the cash outlay already occurred when the asset was bought and than recorded on the balance sheet.

Cash flow accounting is very important part of an organization or business. Cash flow shows the money coming into the organization or business from sales, payrolls, investors, lenders, shareholders, buying material, loans, wages, and so on. In cash flow there are four calculating depreciation (ACRS) methods, the straight line method, the declining balance method, and the sum of the year-digits method. A good organization or business knows that if there is to much inventory it is...