General Accepted Accounting Principals

Topics: Generally Accepted Accounting Principles, Financial statements, Balance sheet Pages: 3 (732 words) Published: March 15, 2011
Generally Accepted Accounting Principles
Health care organizations financial statements are the key tools to show the economic stability of an organization and guide leadership in making informed decisions. The Generally Accepted Accounting Principles (GAAP) is basic assumptions, and principles of accounting to determine the financial position of an organization. These principles offer consistency across health care organizations, and businesses maintaining track of the organizations fiscal returns, detailed balance, and outstanding debt. Generally Accepted Accounting Principles help guide health care organizations through the economic framework of accounting (Finkler & Ward, 2006). Over the next several pages I plan to discuss the accounting principles that apply to most financial statements in health care. Going Concern Principle

The going concern principle assumes a health care organization will continue to operate and remain solvent for an indefinite period. Discovering any uncertainties about the going concern has to be brought forward in the financial statements justifying the concern and the basis for the uncertainties. In the event a health care organization is near the end of life accounting procedures should reflect the special needs of the organization in liquidation (Finkler & Ward, 2006). Conservatism Principle

Today with economic uncertainties, the principle of conservatism gives consideration to the risks taken by health care organizations. This principle has the tendency to anticipate possible losses and not potential gains. Conservatism provides for a health care organization a business structure will be fair and reasonable (Cleverly & Cameron, 2007). Matching Principle

This principle requires examining the cost of doing business in the particular period. Some examples of such cost include supplies sold, salaries, and commissions earned. Matching principle also allows health care organizations the ability to...

References: Cleverly, W., Cameron, A., (2007). Essentials of Health Care Finance (6th ed.).
Sudbury, MA: Jones and Bartlett Publishers.
Finkler, S., Ward, D. (2006).  Accounting Fundamentals for Health Care Management. 
Copyright: Jones and Bartlett Publishers.
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