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WEEK 1:
4 basic elements of financial management:
1) Planning
– identifying steps needed
2) Controlling
make sure that all following the established plan
3) Organizing and Directing
– determining how best to use resources to carry out established plans 4) Decision making
– choosing between alternatives
The Organization’s Structure
There are two basic types of organizations:
- Profit oriented: responsible for paying income taxes and include individuals, partnerships, and corporations. - Nonprofit oriented: not required to pay income taxes and include both voluntary and government subgroups. Still make a profit, BUT the profit is not allowed to be distributed to stakeholders, but rather, must be reinvested in the organization. Examples of large and small organizations are seen in both profit oriented and non-profit arenas. Generally, small organizations are able to use a more informal management system because managers are close to the action and can easily see what is happening. In larger organization, metrics and indicators are used to help managers understand what is going on. Either way, the structure of the organization will affect its financial management. The structure is often communicated via an organization chart that helps members of the organization understand responsibilities and lines of communication. Types of Accounting

There are two types of accounting in healthcare:
Financial Accounting – focuses on external reporting and must be in accordance with generally accepted accounting principles (GAAP). Managerial Accounting – focuses on internal use and is used by managers. The functions of planning, control of operations, and strategic planning are common uses of managerial accounting. Chapter 2 – What Does the Healthcare Manager Need to Know? To understand financial management, it is important to understand the four segments that make a healthcare financial system work: 1) the original records 2) the information system 3) the accounting system 4) and the reporting system. Once the original record exists, that serves as evidence that some event has occurred. Then, the information system gathers this evidence so that the accounting system can record the evidence. After the evidence is recorded, the reporting system can then report the effect of that event. The Annual Management Cycle

The annual management cycle affects the type and status of information that the manager is expected to use. While some information is "raw", other information is adjusted and balanced, so it will vary from the initial raw data. Daily and Weekly Operating Reports

– Typically contain raw data that provides immediate operating information to use for day-by-day management purposes. Quarterly Reports and Statistics
– Typically contain information that has been verified, adjusted, and balanced. Often used as milestones, these reports are also referred to as "interim" reports. Annual Year-End Reports
– The majority of organizations have a 12-month reporting period, which is typically called a "fiscal year". Annual year-end reports cover the full 12-month reporting period (fiscal year) and are usually not intended for use by the manager. The primary purpose of these reports is for reporting the operations of the organization for the period to third parties and to represent the closing out of the information system for a specific reporting period. Communicating Financial Information to Others

Successfully communicating financial information is a valuable skill. When doing so, it is important to: * Create a report as part of your method of communication * Use accepted terminology

* Use standard formats that are accepted in the accounting profession * Begin with an executive summary
* Organize the body of the report in a logical flow
* Place extensive detail into an appendix
WEEK2
Chapter 3 – Assets, Liabilities, and Net Worth
Liabilities – Economic obligations, or debts, payable to...
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