Redesigning Chart of Accounts Can Serve Broader Objectives

Recording Financial Information (Chapter 7). The outside reading article entitled, “Redesigning Chart of Accounts Can Serve Broader Objectives” by Fred H. Mitchell and Cheryl Mitchell, briefly discuss the modifications that you would recommend to your organizations Chart of Accounts based on changes resulting from the Affordable Care Act that would affect your current operations.

Reporting Financial Information (Chapter 8). The statement of cash flows complements the accrual-based income statement by allowing users to assess a company’s performance on a cash basis. It also goes beyond presenting data relating to operating performance and looks at other activities that affect a company’s cash position.  Please comment (hint:  check out the three categories of cash flow on the Statement of Cash Flows)

Part B

1. Why do we have double-entry accounting in our U.S. system of GAAP?
2. In a capital account, explain which side (debit or credit) will decrease and which side will increase.Provide an example (just make one up) of a transaction with a T-account for each side of the transaction showing which type of accounts will receive the debit and credit (e.g., asset, cash, accounts payable, equipment, revenue, etc.).
3. Create a journal entry and a T-Account for each of the following transactions (review the applicable textbook chapter and, if necessary, the optional debits/credits PowerPoint presentation and the YouTube videos) :

• $15,000 worth of equipment is purchased on credit.
• $40,000 of patient bills from last year are collected in cash.
• $10,000 is received from a managed care company for services to be rendered next year for members
• $20,000 worth of supplies is purchased and paid for in cash.
• $5,000 of accounts payable is paid in cash.
• $30,000 of cash is received from taking out a note with the local bank.
• $10,000 of accounts receivable from last year is received in cash.
• Why do organizations prepare cash flow statements and operating statements?
• $7,000 is paid back on the borrowed note.

4.  Why do organizations prepare cash flow statements and operating statements?

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