2 Objectives 18-1 Describe traditional bookkeeping system, including single entry and double entry. 18-2 Define a pegboard system. 18-3 Explain the benefits of performing bookkeeping tasks on the computer. 18-4 List banking tasks in a medical office. 18-5 Describe the logistics of accepting, endorsing, and depositing checks from patients and insurance companies. 18-6 Reconcile the office’s bank statements. 18-7 Give several examples of disbursements. Accounting for the Medical Office
3 Objectives 18-8 Record disbursements in a disbursement journal. 18-9 Set up and maintain a petty cash fund. 18-10 Create employee payroll information sheets. 18-11 Compute an employee’s gross earnings, total deductions, and net earnings. 18-12 Prepare an employee earnings record and payroll register. 18-13 Set up the practice’s tax liability accounts. 18-14 Complete federal, state, and local tax forms. 18-15 Submit employment taxes to government agencies. 18-16 Describe the basic parts of an employment contract. Accounting for the Medical Office
4 Introduction Bookkeeping Systematic record of business transactions. You need an understanding of basic accounting system and certain financial management skills. A medical practice is a business, its income must exceed its expenses!
5 Establishing Procedures Maintain the practice’s bookkeeping. Be consistent. Use check marks as you work to avoid errors. Write clearly with same type of pen. Double check your work frequently.
6 Bookkeeping Systems Single entry system Daily log Patient ledger cards Checkbook registers Payroll records Petty cash Double-entry Assets – goods or services Liabilities – amounts owed by the practice Both sides of the accounting equation must balance Assets = liabilities + owner equity
7 Pegboard System Each transaction on four different forms Reduces errors and saves time Called “one-write” system Uses lightweight board with pegs Daily log sheets Patient ledger card Charge slips Deposit slips
8 Pegboard Processes 1. At start of day 2. Upon patient arrival 3. Attaching the charge slip 4. Before the patient leaves 5. Payments after the patient visit 6. End of day
9 Bookkeeping On the Computer Benefits Saves time Performs mathematic calculation Software for taxes, calculating liabilities
10 Banking for the Medical Office Banking tasks Writing checks Accepting checks Endorsing checks Making deposits Reconciling bank statements Keep all bank materials secure because they represent the finances of the practice.
11 Checks A bank draft or order for payment. Person who writes the check is payer A check must: Be written and signed Include amount to be paid Be made payable to payee Be made payable on demand Include the name of the bank that is directed to make payment.
12 Other Negotiable Papers Cashier Check Check issued on bank paper and signed by bank representative. Certified check Payer’s check written and signed by a payer and stamped “certified” by the bank Money order Certificate of guaranteed payment
13 Check Codes American Banking Association (ABA) number Appears as a fraction 60-117/310 Magnetic ink character (MICR) code Numbers and characters at the bottom of check
14 Types of Checking Accounts Personal accounts Physician personal account for private financial matters Business accounts For office expenses Interest-earning account Used for paying special expenses such as taxes.
15 Accepting Checks Check for: Correct date Correct amount Signature Do not accept third-party check. One made out to the patient rather than the practice. Do not accept a check marked “Payment in Full”unless it actually does pay the complete outstanding balance.
16 Endorsing Checks Write the name of the doctor or practice on the back Include “For Deposit Only” Add bank account number. Use ink or rubber stamp Place endorsement in the 1.5 inch area on the back of check.
17 Completing the Deposit Slip Post the payment to the patient ledger card Put the check with others to be deposited Fill out a deposit slip Account number is printed on deposit slips in MICR numbers that match those on check Can include computer printed list of checks if you include a deposit slip
18 Making the Deposit Plan to make deposits in person Avoid sending cash through the mail Obtain deposit receipt May have to make deposits daily
19 Reconciling Bank Statements Compare the office’s financial records with the bank records to ensure they are consistent. Must be done once a month Be sure all checks written are the same and all checks deposited match on both records.
20 Electronic Banking Basic tasks will be the same as in an office that uses traditional banking methods You are still responsible for recording and depositing checks Computer software will: Calculate new balance Reconciling the office bank statement Use computer password for security
21 Apply Your Knowledge What are three things should you add to the back of a check that you receive from a patient?
22 Answer Apply Your Knowledge - Answer What are three things should you add to the back of a check that you receive from a patient? 1. Name of the doctor or practice 2. “For Deposit Only” 3. Bank account number
23 Features of Banking Software Records deposits Pays bills Displays checkbook Balances checkbook
24 Managing Accounts Payable Payments for supplies, equipment, and practice- related products and services Payroll Taxes
25 Managing Disbursements Managing supplies Usually one person handles purchasing Combine orders if possible Follow practice purchasing guidelines Buy from reputable supplies Get the best quality and the amount for which insurance companies will reimburse
26 Writing Checks Make sure the checking account balance will cover the check you will write If you make an error when completing a check, write void in ink across the front of the check Have the doctor sign the check and the invoice.
27 Types of Checks Voucher checks Standard checkbook Cashier’s check Purchased from a bank and signed by the bank official Counter check Allows depositor to withdraw funds from her account only Traveler’s checks Used when traveling instead of carrying large amounts of cash.
28 Recording Disbursement Give each column a heading Record each check in appropriate columns Determine expense category of the check Record the check amount
29 Managing Petty Cash To avoid writing checks for such small amounts use petty cash funds Usually $50.00 Write a check to “petty cash” Enter the check in the miscellaneous column of disbursement records Get a petty cash voucher when money is removed. Replace money once a month to keep amount at $50.00.
30 Understanding Financial Summaries Statement of Income and expense Profit and loss statement Cash flow statement Money available to cover expenses Trail Balance Combined expense column total equal to total check amount column
31 Handling Payroll Obtaining tax ID number Creating employee payroll information sheets Calculating employees’ earnings Subtracting taxes and other deductions Writing paychecks Creating employee earnings records Preparing a payroll register Submitting payroll taxes
32 Handling Payroll Electronically Create, update, and delete employee payroll information files Prepare employee paychecks, stubs and W-2 forms Update and print employee earnings records Update all appropriate bookkeeping records, such as payroll ledger and general ledger with payroll data.
33 Taxes Calculating and filing taxes Setting up tax liability accounts Understanding federal tax deposit schedules Submitting federal income and FICA taxes Submitting FUTA taxes Click for Larger View
34 Quarterly Tax Form When should this form be completed? Every three months. BACK
35 More Taxes Filing an employer’s quarterly federal tax return Handling state and local income taxes Filing wage and tax statements W-2 W-3 Transmittal of wages Tax statements
36 Managing Contracts A written agreement of employment terms between employer and employee. Include names and addresses Considerations Starting and ending dates Signatures of both parties
37 Medical Assistant Contract Includes: Description of your duties and your employer’s duties Plans for handling major changes in job duties Salary, bonuses, and other compensation Benefits Grievance procedures Termination procedures
38 Apply Your Knowledge What is a W-2? What is FUTA?
39 Answer Apply Your Knowledge -Answer What is a W-2? Shows the employee’s total taxable income for the year. What is FUTA? Annual Federal Unemployment Tax Return
40 Summary Medical Assistant You will need to understand the proper management of accounts receivable and accounts payable. The use of standard bookkeeping and banking procedures is necessary to maintain the business of the office.