1. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Chapter 20 Accounts Payable and Accounting Procedures

2. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Accounts Payable (A/P) Amounts owed by the practice to suppliers or other service providers – For expenditures: acquired material, property, and labor exchanged for money

3. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Invoices Company details Invoice number Dates Client dates Fees Payment terms

4. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Petty Cash

5. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Accounting Basic accounting formula: Assets – liabilities = net worth

6. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Accounting Ratios Accounts receivable ratio Current A/R balance ÷ avg. month’s gross production Gross collections ratio Total payments ÷ Total Charges Net collections ratio Total payments ÷ Total Charges, minus write-offs Cost ratio Total expenses ÷ Number of procedures

7. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Write-offs Anything deemed “uncollectable” Examples – Bad debts – Professional courtesy discounts – Contractual discounts

8. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Cost-Benefit Analysis Identify costs Identify benefits Compare costs against methods

9. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Financial Records Income statements – Demonstrates profit and expenses for a given month – Most commonly generated year-end report

10. Copyright ©2012 Delmar, Cengage Learning. All rights reserved. Financial Records Balance sheets – Statement of financial position – Displays assets, liabilities, and owner’s equity – Different ways to format and display balance sheets