Understanding Basic Accounting

Understanding Basic Accounting

A simple article on the basic understanding of accounting, this article, Understanding Basic Accounting, gives a brief overview on the financial statements that are seen in the business world as well as the questions that one should ask while reading through those statements. The main financial information that a company provides is called a balance sheet. This array of documents provides limited information and enables one to compare it to the company’s past results and see how the company is doing financially within and as compared to other businesses.

San Joaquin County was my former employer. I worked at San Joaquin General Hospital in French Camp. I was not in any way involved with balance sheets, in reading the article, I can start to understand the cash flow statements and how they may pertain to the hospital’s financial business. The employer must present and/or make available the cash flow statements to the Board of Directors and the public. The cash flow statements from operating activities show the underlying cash performance of the company’s operations.

The cash flow from investing activities shows the money that the company spends on investments, including capital expenditure and investments. (Understanding basic acct) The only investments that the county would possibly make on behalf of the hospital would be to purchase or lease equipment to further the services that could be offered, i.e. an MRI machine. The new structure at the hospital that was built in 1997 was a true investment. This was done to update the old structure as well as attempt to bring in a new clientele.

The cash flow from financial activities reflects all cash flow of a capital nature. (Understanding basic acct) Pertaining to the business of the hospital, this would be the monies brought in in the form of payment for services rendered from individuals and insurance companies. Financing a public, county hospital would be impossible without the assistance of government revenue, grants, and payment for services rendered. I do remember talking to a friend in the business office about the amount of money that was written off as bad debt each year. With so many patients unable to pay, this was not a surprise.

The hospital is not paid at the time of service, it can be many months later and then paid over a long period of time. Interest was not charged on outstanding debt, so there is a lot of money that goes as unrecorded debt.

There are many areas for improvement. The hospital is expected to be open 24/7. I would recommend that the employees be more closely monitored on how they spend their day on the job. I think that the employees waste hours daily.

President