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Accounting for Non-Accountants
- 1. Presented by: Mary Shively Director,Healthcare Software Systems and Support shively@hwco.com Helen Weeber, CPA Director, Non-Profit Services weeber@hwco.com
- 2. Assets = Liabilities+ Owner’s Equity or Assets – Liabilities = Owner’s Equity 2Copyright © 2016 HW&Co. All Rights Reserved. The Obligatory Accounting Equation
- 3. ASSETS Cash / BankAccounts Accounts Receivable Pre-Paid Expenses Land Buildings Fixtures and Furnishings Accumulated Depreciation 3Copyright © 2016 HW&Co. All Rights Reserved. Account Categories - ASSETS
- 4. LIABILITIES Accounts Payable Notes Payable AccruedLiabilities Resident Trust Payable Security Deposits Refunds Payable 4Copyright © 2016 HW&Co. All Rights Reserved. Account Categories - Liabilities
- 5. OWNER’S EQUITY Capital Withdrawals Revenues Expenses Retained Earnings 5Copyright© 2016 HW&Co. All Rights Reserved. Account Categories – Owner’s Equity
- 6. Double Entry Accounting –Each transaction affects two accounts Cash vs. Accrual Cash: Recognize when payment received Accrual: Recognize when service delivered My Asset is your Liability 6Copyright © 2016 HW&Co. All Rights Reserved. Accounting Basics
- 7. T Accounts –Representational - Divides the account into Left and Right sides 7Copyright © 2016 HW&Co. All Rights Reserved. More Basics 1010-00 CASH 20,000 10,000 500 Debits and Credits Debit: Left side of an account Credit: Right side of an account
- 8. Liabilities and Owner’sEquity 8Copyright © 2016 HW&Co. All Rights Reserved. Increases and Decreases in Accounts (The Rules of Debit and Credit) Increases: Decreases: Recorded on Left side Recorded on Right side (DEBIT) (CREDIT) Assets Decreases: Increases: Recorded on Left side Recorded on Right side (DEBIT) (CREDIT)
- 9. 9Copyright © 2016HW&Co. All Rights Reserved. Normal Balances of Accounts An Account’s “Normal Balance” appears on the side of the account – debit or credit – where we record increases. Assets . . . . . . . . . . . . . . . Debit Liabilities . . . . . . . . . . . . Credit Owner’s Equity . . . . . . . Credit Capital . . . . . . . . . . . Credit Withdrawals . . . . . . Debit Revenues . . . . . . . . Credit Expenses . . . . . . . . Debit
- 10. Debit Credit A/R -Private Pay 9,000 R&B Private Pay Revenue 9,000 A/R - Medicaid 5,400 A/R – Patient Liability 1,200 C/A – Medicare Revenue 2,400 R&B Medicaid Revenue 9,000 10Copyright © 2016 HW&Co. All Rights Reserved. Sample Journal Entries: Room & Board Revenue
- 11. Debit Credit A/R-Medicare 17,233 R&BMedicare Revenue 9,000 C/A – Medicare Revenue 8,233 A/R-Medicare 12,403 A/R- Medicare Co-ins 4,830 R&B Medicare Revenue 9,000 C/A – Medicare Revenue 8,233 11Copyright © 2016 HW&Co. All Rights Reserved. Sample Journal Entries: Room & Board Revenue
- 12. Debit Credit Cash 9,000 A/R– Private Pay 9,000 Cash 5,400 A/R – Medicaid 5,400 Cash 1,200 A/R – Patient Liability 1,200 12Copyright © 2016 HW&Co. All Rights Reserved. Sample Journal Entries: Cash Receipts
- 13. Debit Credit Garbage RemovalExpense 525 A/P – Accounts Payable 525 Vehicle Loan Expense 924 A/P – Accounts Payable 924 13Copyright © 2016 HW&Co. All Rights Reserved. Sample Journal Entries: Invoice Entry
- 14. Debit Credit A/P –Accounts Payable 525 Cash 525 A/P – Accounts Payable 924 Cash 924 14Copyright © 2016 HW&Co. All Rights Reserved. Sample Journal Entries: Checks/Payments
- 15. Depreciation - Assets declinein usefulness over lifetime - Asset costs are allocated over that lifetime, as an expense Debit Credit Depreciation Expense 1200 Accumulated Depreciation 1200 15Copyright © 2016 HW&Co. All Rights Reserved. Other Journal Entries
- 16. Payroll Journal Entries ComplexEntities Salaries by Position Type Bank Withdrawals Often imported from Payroll Company 16Copyright © 2016 HW&Co. All Rights Reserved. Other Journal Entries
- 17. Step One: Adjustoff the credit 17Copyright © 2016 HW&Co. All Rights Reserved. Refund Processing: A Two-Step Process Debit Credit A/R Private Pay 100 Refunds Payable 100
- 18. Step Two: Paythe Refundee Debit Credit Refunds Payable 100 A/P - Accounts Payable 100 A/P – Accounts Payable 100 Cash 100 The Refunds Payable Clearing Account should always be Zero, if both steps have been completed. - Incorporate the verification into EOM checklist 18Copyright © 2016 HW&Co. All Rights Reserved. Refund Processing: A Two-Step Process
- 19. Contractual Adjustments A/R –Medicare B 1.24 C/A – Medicare B 1.24 Bad Debts Bad Debt Expense 300 A/R – Medicare B 300 Balance Transfers A/R – Medicare A Coins – Private 200 A/R - Medicare A Co-ins-Insurance 200 19Copyright © 2016 HW&Co. All Rights Reserved. Adjustments
- 20. - Balance Cashto Bank Statements - Process take-backs and offsets properly - Make sure all deposits are accounted for - Correct cash errors through cash, not adjustments - Perform Revenue checks to make sure census balances to the revenue journal entry - Make sure A/R Aging Report Balances to GL A/R account balances - End Result: A Perfect Journal Entry for the GL 20Copyright © 2016 HW&Co. All Rights Reserved. Revisit your A/R End Of Month Processes
- 21. Chart of Accounts GeneralLedger Trial Balance Bank Reconciliation The Accounting Close Process Financial Statements 21Copyright © 2016 HW&Co. All Rights Reserved. More Basics
- 22. Shows Financial Performanceover a Period of Time Two sections: Revenue & Expenses Financial Performance- how well did the business do this period? Let’s look at an example 22Copyright © 2016 HW&Co. All Rights Reserved. The Income Statement
- 23. Shows the entity’sfinancial situation at a given Point in Time Three sections: Assets Liabilities Owners’ Equity Let’s look at an example 23Copyright © 2016 HW&Co. All Rights Reserved. The Balance Sheet
- 24. SNFs: Q Codes Ancillaries –PS&R Invoice/Expense Coding Case Mix ICFs: Invoice/Expense Coding IAF Score 24Copyright © 2016 HW&Co. All Rights Reserved. Considerations for Cost Reporting Purposes
- 25. 25Copyright © 2016HW&Co. All Rights Reserved. Accounting for Coinsurance Bad Debts
- 26. 26Copyright © 2016HW&Co. All Rights Reserved. Accounting for Coinsurance Bad Debts
- 27. 27Copyright © 2016HW&Co. All Rights Reserved.
- 28. Thank You! Mary Shively shively@hwco.com HelenWeeber, CPA weeber@hwco.com 23240 Chagrin Blvd., Suite 700 Cleveland, OH 44122 P. 216.831.1200 F. 216.831.1842 460 Polaris Parkway, Suite 300 Westerville, OH 43082 P. 614.794.8710 F. 614.794.8712 8800 Tyler Blvd. Mentor, OH 44060 P: 440.951.1777 F: 440.951.2143 www.hwco.com 877.FOR.HWCO Copyright © 2016 HW&Co. All Rights Reserved.