Chapter 33 Accounts Payable and Accounting Procedures
net collection ratio
adjusted collection ratio
Assets
money and items of value in a business
Accounts Payable
money owed by a company to its creditors. (Outstanding bill owed for products, )
explain comparing shipments to packing lists or invoice nis important.
to cross reference what you ordered against what you received. (for accuracy)
why is it important to know the networth of a business?
the networth will let you know the business profit after loss and expenses. (all company expenses)
Explain why collection ratios might be important to a physicians office.
to know how often are we (physicians, office, hospital) having a turnaround. (ex: insurance reimbursement...best time frame 30-45 days)
A/P (Accounts Payable)
total amount owed by practice to supplier
Cost ratio equation
total expenses ÷ total numbers of procedures for one month (ex: $50,000÷$10,000(monthly gross) =5)
net collection ratio equation
total payments (A/R) ÷ Total charges - write offs (ex:$10,000(totally payments ÷$50,000(total charges)-$500(write offs)= -$498
managerial
(adj) relating to a manager or management
Balance Sheet
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
what charges are considered when deemed uncollectible? provide 2 examples.
Deemed uncollectible is insurance denied. if insurance cancelled, if patient moved, or patient deceased (go after the money)
Please Excuse My Dear Aunt Sally
Parenthesis, Exponents, Multiplication, Division, Addition, Subtraction
Gross collection ratio
Total Payments (A/R(accounts receivable)) ÷ Total Charges (ex: $8,000(total payments) ÷ $4,000(total charges)= 2
Name 2 types of collection ratios most frequently used in a medical officer.
accounts receivable ratios (shows money that was paid) and cost ratio
petty cash
a small amount of stores money, ranging from $25-$75
invoice
an acquired material in exchange for money. (bill)
Basic Accounting formula (Equation)
assets- liabilities = networth (ex:.$300,000(asset)- $175,000(liabilities)=$125,000(networth) ÷ 12 months= $10,416.66 ÷ 4 weeks=$2,604 ÷40hrs=$65)
Liabilities
assets-liability
what are three steps of cost-benefit analysis?
come up with an option, determine the cost decision (how much is it going to cost?), calculate benefit.
Describe what should be done when a shipment item does not match the invoice.
contact the vendor and track the shipment
A/R ratio equation
current A/R (accounts receivable) balance ÷ average monthly gross production
A/R (Accounts Receivable) ratio
current A/R balance ÷ average monthly gross production
net worth
debts or a/p (accounts payable) owed by the business
Income Statement
demonstrates the profit and expenses for a given time period
cost-benefit analysis
demonstrates the profit and expenses for a given time period
Expidenture
documents with itemized good or services
For what purpose is petty cash used?
emergencies (small item supplies)
Equity
fairness
cost ratio
formula that shows the cost of a procedure or service and helps determine the financial value of maintaining certain services
Explain what income statements and balance sheets demonstrate to a medical practice.
income statements are monies in the company revenue and balance sheets are a list of charges and procedures.
voucher
instrument authorizing a cash payment.
write offs
negative adjustments to patient accounts
