Ch. 33 accounts payable and accounting procedures
expenditure
acquired material, property, or labor in exchange for money.
assets
money and items of value in a business
accounts receivable ratio
when calculated, helps you understand how quickly outstanding accounts are paid as well as the effectiveness of the office collection process
accountant
will analyze and interpret reported information
write-offs
Charges that are deemed uncollectible by any business.
net collection ratio
Also known as the adjusted collection ratio, it is calculated by taking the total payments for a specific period of time divided by the total charges, with the write-offs deducted from the total charges
accounting formula
Assets - Liabilities = Net Worth
cost ratio
Formula demonstrates the cost of a specific procedure or service
gross collection ratio
Includes the total payments received by a practice for a specific period of time, not including any write-offs
invoice
a document that includes itemization of goods and purchases or services provided together with the charges and terms of the agreement
cost-benefit analysis
allows for program evaluation by demonstrating whether the benefits received outweigh its costs
balance sheet
also known as a statement of financial position, reveals a company's assets, liabilities, and owner's equity (net worth)
managerial accounting
also known as cost accounting, is the study and analysis of financial data as it applies to operational issues within a company
A/R ratio formula
current A/R balance / average monthly gross production = A/R ratio
liabilities
debts or accounts payable (A/P) owed by the business
income statement
demonstrates the profit and expenses for a given month and includes year-to-date information for a given year
net worth
demonstrates the value of a business
turnaround time or a/r ratio
has a goal of two months or less
bookkeeping
involves only the recording of economic events
accounting
involves the entire process of identifying, recording, and communicating economic events
if you are requesting an invoice by email
it is useful to request it in PDF format so that it cannot be altered
operating information
needed on a day-to-day basis for a company to conduct business
accounts payable
refers to the total amounts owed by the practice to suppliers and other service providers for regular business operating expenses
Pegboard system
used effectively for many years, are relatively inexpensive, provide hard copies for account balances, and are easy to use
petty cash
used when small payments are required