What type of health care entity might use fund accounting and why would they use this method?
eBook: Gapenski’s Fundamentals of Healthcare Finance – 3rd Edition Although Accounting and Finance are two distinct disciplines, the professionals working in these areas often work closely in the health care setting and may even be housed in the same department. Today, we see even more Chief Financial Officers (CFOs) who possess a CPA (Certified Public Accountant) license. Thus, it is important that someone working in health care finance also has a basic understanding of accounting concepts. In approximately 150 to 200 words, respond to the following questions. What is an asset? Provide one example of a current asset and explain what is meant by “current asset”. (2 points for definition of asset; 2 points for an example of a current asset; 2 points for definition of current asset; 6 points total) What is a liability? Provide one example of a current liability and one example of a long-term liability. (2 points for definition of liability; 2 points for an example of a current liability; 2 points for an example of a long-term liability; 6 points total) What is the difference between a liability and an expense? Provide one example of an expense. (2 points for explanation of the difference between terms; 1 point for an example of an expense; 3 points total) What is meant by the term “fund accounting”? What type of health care entity might use fund accounting and why would they use this method? (4 points for definition; 4 points for identification an explanation of an entity using fund accounting; 8 points total) Given the following data, prepare a Balance Sheet in proper format for Healthy Body Clinic dated December 31, 2020 (1 point for proper format; 9 points for proper placement of accounts; 2 points for balancing; 12 points total): Accounts payable: $20,000 Accounts receivable, net: $60,000 Cash: $30,000 Equity: $230,000 Long-term debt: $120,000 Long-term investments: $100,000 Net property and equipment: $150,000 Other assets: $40,000 Other long-term liabilities: $10,000