Support our online development, and advance our onground research initiatives in free market economics, as we seek to showcase the brightest Next-Gen minds.
THE ME-P DISCLAIMER: Posts, comments and opinions do not necessarily represent iMBA, Inc., but become our property after submission. Copyright © 2006 to-date. iMBA, Inc allows colleges, universities, medical and financial professionals and related clinics, hospitals and non-profit healthcare organizations to distribute our proprietary essays, photos, videos, audios and other documents; etc. However, please review copyright and usage information for each individual asset before submission to us, and/or placement on your publication or web site. Attestation references, citations and/or back-links are required. All other assets are property of the individual copyright holder.
Financial Statements [A Review for Physicians]
By Dr. David Edward Marcinko; MBA, CMP™
[Publisher-in-Chief]
The Net Income [Profit-and-Loss Statement] Statement [NIS] is only one of four financial statements.
The four consolidated statements are: balance sheet, net-income, cash flow and retained earnings.
The NIS reflects the following in a medical practice or healthcare business entity:
-
Income from patient services, plus revenue from research grants, educational programs, gift and cafeteria sales, office space and parking lot rental, and investment income; and,
-
Expenses including general overhead, non-operating expenses like salaries and wages, fringe benefits, supplies, interest, professional fees, bad debts, depreciation, and amortization.
Increases in working capital, current assets, the retirement of debt, and investment in new fixed assets are not considered in the Net Income Statement [NIS].
Assessment of Accounting Differences
Definitional differences do occur, however, in the income statement.
For example, the NIS may report physician compensation and benefits in the expense category, during a period of time.
Small physician practices, on the other hand, may report income and expenses on a “cash accounting” basis reflecting income actually received and expenses actually paid.
The “accrual method” of accounting records expenses when they are incurred and income when earned, not when paid or received as in the cash method.
The cash method is easier, but the accrual method is more accurate and most healthcare entities use this method. Accrual accounting will increase going forward because of the nature of discounted contracts, capitated contracts, or other fixed reimbursement arrangements.
Conclusion
Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
- PHYSICIANS: www.MedicalBusinessAdvisors.com
- PRACTICES: www.BusinessofMedicalPractice.com
- HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
- CLINICS: http://www.crcpress.com/product/isbn/9781439879900
- ADVISORS: www.CertifiedMedicalPlanner.org
- BLOG: www.MedicalExecutivePost.com
- FINANCE: Financial Planning for Physicians and Advisors
- INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Share this:
Filed under: Investing | Tagged: balance sheet, cash flows, current assets, david marcinko, financial statements, Health Care Finance, net income statement, profit and loss, retained earnings, working capital | Leave a comment »
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 