1. HA240: Medical Office Accounting Week 4 Seminar
School of Health Science

2. School of Health Science
Week 4 Seminar
In this week’s seminar we will cover:
The four kinds of information that the financial records of any business should show
The difference between accounts payable and accounts receivable
The three most common bookkeeping systems found in physicians’ office today.
The importance of a trial balance.
Maintaining a petty cash fund
Looking forward to Unit 5
Conclusion
School of Health Science

3. Financial Record Information
Financial records of any business should show the following:
How much was earned in a given period
How much was collected
How much is owed
The distribution of expenses occurred
Periodic financial reviews can provide:
Improved business practices
Better management of time
Curtailment or elimination of unprofitable services
Better budgeting of expenses
Remember it is important to:
Use good penmanship
Use the same pen and ink style consistently
Keep columns of figures straight
Write well-formed figures
Carry decimal points correctly
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4. Accounts Payable and Accounts Receivables
List of debts currently owed by a person or business. These are debts incurred mainly for the purchase of services, inventory, and supplies. The accounts normally do not include accrued salaries payable, accrued interest payable, or rent payable. This list is kept in the ordinary course of the organization’s business
Accounts Receivable:
List of money owed on current accounts to an organization, which is kept in the normal course of the organization’s business and represents unsettled claims and transactions. Accounts receivable normally arise from the sale of a company’s products or services to its customers.
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5. Accounts Payable Procedures
Invoices and statements
Invoices describe the items purchased and show the amount due
Place invoices in a consistent place until they are paid
Some vendors require payment from invoice
Other vendors send monthly statements
Paying for Purchases
Compare statements with invoices for accuracy
Fasten the statement and invoice together
Write the date and check number on the statement
Mail the check
File the invoice and statement
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6. Accounts Receivable Example
Balancing End-of-Month Accounts Receivable
Accounts receivable at first of month    _____
Plus total charges for month      _____
Subtotal            _____
Less total payments for month      _____
Subtotal            ______
Less total adjustments for month      _____
Accounts receivable at end of month    _____
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7. School of Health Science
Financial Records
Accountants often use different types of means to record the organization’s financial transactions
Some Examples:
Daily journal
The chronologic record of the practice
The financial diary
All information regarding services rendered, charges, and receipts is recorded in the daily journal
All transactions must be recorded
Checkbook
Receipts are deposited into checking accounts
Keep records of each deposit
Bills are paid by check, through use of online payment services, or through automatic withdrawals
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8. Common Bookkeeping Systems
Single-Entry System, Double Entry System and Peg Board System
Single Entry System
Oldest and simplest method for keeping records
Includes three basic records:
general journal, cash payment journal, and accounts receivable ledger
Drawbacks of Single-Entry Systems
Errors are not easily detected, no built-in controls and periodic analyses are inadequate for financial planning
Double Entry System
Includes the same basic journals as a single-entry system
May include numerous subsidiary journals
Most complete of all systems and provides most comprehensive view
Peg Board System
Most commonly used manual method of accounting in the physician’s office
Computer programs are similar to pegboard systems
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9. Trial Balance and Petty Cash
Trial Balance is the method of checking the accuracy of accounts
Obtaining the Trial Balance
Pull the account cards that have a balance due.
Enter each balance on the calculator
Total the figures
Amount should equal the accounts receivable balance figure on the control
Petty Cash
Petty cash is used to pay minor expenses
A total of $25 to $50 is usually sufficient for the office
Bills should be paid by writing checks or via online services instead of using petty cash, even if a bill is small
Money should be in a cash drawer that can be kept locked
Only one person should be in charge of petty cash
All money should be accounted for at all times
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10. Looking Forward to Unit 5
As we move forward to Unit 5, we will start to look at the personal side of the profession
We will discuss values that are considered in determining professional fees.
We will learn to distinguish among the terms usual, customary, and reasonable.
We will discuss the value of estimates for patient treatment.
We will learn the ways by which payment for medical service is accomplished.
And finally, we will discuss the concept of professional courtesy.
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11. School of Health Science
Conclusion
It is important to know and understand what information needs to be included in an organization’s financial records at all times
Remember the differences between accounts payable and receivables
Know the differences, advantages and drawbacks of each bookkeeping type
Make sure to keep an accurate trial balance
Keep up with petty cash
School of Health Science