The implications of the basic accounting equation are Assets – Liabilities and Equity.
Creditor claims are called liabilities and investor claims are call equity. Breaking it down to an expanded form are as follows. Claims/Assets= Liabilities + Equity (Edmonds, T. P. (2010).
For example: A student buys a car to get back and forth to school for $2000. He borrowed $500 from his mother and spent another $1500 from his savings. His assets are worth 2000, liabilities are &500, and equity $1500.
How would healthcare companies operate without accounting? Why do we need financial and managerial accounting and what are the fundamental differences between the two?
Accounting is an information system that reports on the economic activities and financial condition of a business or other organization.
Without an operating system of accounting, companies would not operate properly. They would lose track of staying current in regulation changes related strictly to bookkeeping for the medical facilities. The proper funding needed to differentiate and separate the cost of an equipment needed to care for the patient, and/or the pay-out to those employees that take of them every day would affect everything if a healthcare operating system wasn’t in play.
Why do we need financial and managerial accounting and what are the fundamental differences between the two?
We need the financial and managerial accounting because both serve important information pertaining to the healthcare world. Managerial accounting provides information useful to internal decisions makers and managers in an operating system can operate and pay close attention to. Financial accounting is designed to meet the information needs of external users of business information.
Difference between the two are that in managerial accounting reports can be made daily, weekly, or monthly. Financial can help in monitoring and... [continues]
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