TurskeyM_M3_A3 - Accounting Practices and Entries...

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Accounting Practices and Entries Accounting practices and principles are at the heart of financial management. To understand the financial transactions of health care organizations, it is necessary to understand the different types of accounting practices and how entries are made and items recorded using each practice. The different types of accounting are namely accrual, cash flow, and fund accounting. Along with these types of accounting there is also depreciation and inventory that has to be accounted for. Accounting Entries First there is namely accrual this type of accounting recognizes certain events even if the money is not there at that time. For example when a person takes out a loan the bank can account for the interest on that loan even if all that money is not at the bank during that time. A company will make journal entries for this type of accounting (Simple Studies, n.d.). First when a company begins it must get money from the bank the bank do this as entries of debits and credits? The cash given is the debit say 50, 000 and the paid-in capital is the credit which is also 50,000. This company is a health care organization that provides home visits and gets paid quarterly which is every three months. When there accountant does their accounting they also use namely accrual. Since they must show profit for every month even if the cash is not there until months later. They do their entries as accounts receivable for x amount of dollars as the debit then revenue of the same x amount of dollars as the credit (McLean, 1997) Cash flow accounting which means there is no other source of cash inflow, the entire purchase price is regarded as a cash outflow at the time the purchase was made. Entries under cash flow are as follows first there are cash inflows. Under cash inflows there is contribution of equity of 50,000 which is
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TurskeyM_M3_A3 - Accounting Practices and Entries...

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