Generally Accepted Accounting Principles

In: Business and Management

Submitted By lailabe1230
Words 1117
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Generally Accepted Accounting Principles
January 11th, 2014 R.G.

Generally Accepted Accounting Principles
Every organization consists of an accounting department that manages the finances. The key element to maintaining any hospital, ambulatory care center, or private medical office is to have a structured financial statement and a team of accountants to audit the establishment. The generally accepted accounting principles that are reviewed include entity concept, going-concern concept, matching principle and cash vs. accrual accounting, the cost principle, objective evidence, materiality, consistency, and full disclosure. The “certified professional accountants are required to indicate whether an audited set of financial statements is in compliance with generally accepted accounting principles” ( (Finkler, Kovner, & Jones, p.104, 2007). The entity concept focuses on the object of study whether it may be a hospital, urgent care center, nursing school, or a private medical office. The intention of the concept is for identification purposes. It is related to health care, for example, a hospital may be affiliated with a long term care facility, a nursing school, and medical office. The hospital is considered as one entire entity. A long term care facility, nursing school, and medical office are considered subentities. The financial statements are prepared separately for each of the identified subentities.
The second factor of the generally accepted accounting principle is the going-concern concept. The goal when assessing the financial aspects of the organization is to gain a strong understanding that it will continue to grow and not go out of business. The intention of the concept is to make sure that the accounting audits indicate that the hospitals or other medical centers will continue to prosper. It is related to health care because the…...

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