Question

Financial Statements and Accounting Concept

Consider a healthcare organization with which you are familiar with and explain the difference between cash and accrual accounting in healthcare setting. Be sure to include a discussion of the revenue recognition and matching principles.

Answer 1

Answer:

1. Profit is the surplus after the total expenditure is deducted from the total revenue while the money is in the bank or in the hands of easily accessible.

2. Profit is calculated in the profit and loss trading account while cash is displayed in the cash flow statement or cash flow statement.

3. Cash is only recorded when the money is exchanged, that is, it is recorded in the statement only after the business has received the actual money, not what it was promised to receive. For example, if the business makes 20% of sales in cash and 80% on credit, only cash received for "20%" of sales will be recorded in the cash flow statement and it will record the rest " 80% ”In other words, because of our" accumulated idea "in the same example above, when calculating profits, we would include cash as well as credit sales, which means All sales made. Now, this shows that while businesses are showing “book profits,” it will be real and short of cash.

Other cases where a profitable business may run out of money are:
a: Purchase of fixed assets (through money)
b: excessive trade

• Therefore, cash is important in the short term as it is necessary to repay the creditors, workers and workers. If there is not enough money, the lender (in extreme cases) can sue you and sue the bankruptcy or bankruptcy in the business case.
• Unemployed workers on time will be relocated, resulting in low productivity, high absenteeism, and workflow.
• Profits are necessary for the long-term survival of the business, otherwise no institution is interested in investing in the business which leads them to lower returns on their capital investment.

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