Discuss generally accepted accounting principles relating to health care.
Include a brief description of each principle and the intention behind the principle.
Relate each principle to health care.
From the research I have done thus far I have read about the following principles. I have found them to be the most common:
Matching principle and cash vs accrual accounting
Generally Accepted Accounting Principles (GAAP) are applied to all areas, including the healthcare field. The concepts that are central to GAAP include the entity concept, the going-concern concept, the matching principle, and the cost principle, the principal of objective evidence, materiality, consistency, and full disclosure. The entity concept refers to keeping the business of the entity separate from the owner or officers' personal business. The reason for this principal is so that owners and executives are not paying their personal expenses from the entity's funds. In the healthcare field, the expenses are typically large, and this would prevent executives from hiding their own expenses in the expenses of the entity.
The going-concern concept states that as of the date on the financial statements, it has been determined that the company is a going-concern, meaning that the company or entity can sustain itself based on their current financial health, in the near future. The concept behind this principle is to prevent investors from putting their money into companies or organizations that are on the verge of failure. This is particularly relevant to healthcare, because investors that put their money into private healthcare organizations typically invest large amounts of money. The investors would need a way to determine if the institution they are considering for investing purposes is healthy, or if the organization is headed for financial trouble.
The matching principle is another principle that is central to GAAP. The matching principle states that revenues need to be matched with expenses in the period in which they are incurred. This allows for the most accurate determination of ...
The Solution relates the Generally Accepted Accounting Principles to health care.