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Your friend, Dr. Cavity, DDS, has decided that he wants you to help him set up the books for his Dental practice. He would like to accept credit cards, cash, checks, and insurance carriers. His office elects to file the insurance on behalf of the patient and then bill for any differences. What method of accounting (Cash or Accrual) would you suggest that he use? What are some of the benefits and challenges associated with your choice?

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Your friend, Dr. Cavity, DDS, has decided that he wants you to help him set up the books for his Dental practice. He would like to accept credit cards, cash, checks, and insurance carriers. His office elects to file the insurance on behalf of the patient and then bill for any differences. What method of accounting (Cash or Accrual) would you suggest that he use? What are some of the benefits and challenges associated with your choice?

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He should use an accrual method of accounting. The cash method is really only appropriate for small businesses under limited circumstances. Due to his particular circumstances, he could not even feasibly use a cash method of accounting, even if he wanted to. The way the doctor has this set up is that he bills the insurance company, so the patient probably pays a small fee for the co-pay at the time ...

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