1. What are generally accepted accounting principles (GAAP)?
2. What is the purpose of GAAP?
3. What organizations are involved in establishing GAAP?
4. Entries for the Warren Clinic 2007 income statement are listed below in alphabetical order. Reorder the data in proper format.
|
Bad debt expense
|
$ 40,000
|
|
Depreciation expense
|
90,000
|
|
General/administrative expenses
|
70,000
|
|
Interest expense
|
20,000
|
|
Interest income
|
40,000
|
|
Net income
|
30,000
|
|
Other revenue
|
10,000
|
|
Patient service revenue
|
440,000
|
|
Purchased clinic services
|
90,000
|
|
Salaries and benefits
|
150,000
|
|
Total revenues
|
490,000
|
|
Total expenses
|
460,000
|
5. What is the difference between the income statement and balance sheet in regards to timing?
6. What is wrong with this statement: "The clinic's cash balance for 2007 was $150,000, while its net income on December 31, 2007 was $50,000."
7. What is fund accounting, and why is it important to some healthcare providers?
8. Middleton Clinic had total assets of $500,000 and an equity balance of $350,000 at the end of 2006. One year later, at the end of 2007, the clinic had $575,000 in assets and $380,000 in equity. What was the clinic's dollar growth in assets during 2007, and how was this growth financed?