Reference no: EM133221685

Assignment - Understanding Accounting and Budgeting Discussion

Part One - Understanding Accounting and Budgeting

Physicians are clinical practitioners who are concerned with the health and care of their patients. Many physicians do not have a business background and have very little to do with the cost of doing business.

Physicians deal with best practices for patient care however they do not have a firm understanding of how to construct or implement and contain a working budget.

When physicians move into administrative and management positions, their responsibilities do include budgeting for different clinical departments.

Dr. Feather is a physician who has been working within the health care arena for 10 years; he recently became the Director of one of the departments that constitutes a group of 12 physicians.

Dr. Feather has never been involved in having the responsibilities of Financial Management. Because of this lack of understanding and because he will be responsible in the future, he decided to take an accounting and budgeting course. During the class, Dr. Feathers was asked the following questions.

For this final, answer each of these questions in terms of the development of understanding of basic accounting for a Director to utilize in group practice.

1. What is accounting?

2. Why is accounting important?

3. How is accounting related to your position as Director within a health care group practice?

4. What is the meaning of ALOE

5. What are the different types of financial statements what are they for?

What is an Income Statements?

What is a Statement of Retained Earnings?

What is a Balance Sheet?

What is a Statement of Cash Flow?

After Dr. Feathers completed the accounting class, he had a very good idea of basic Accounting. Now, he was taking a class in budgeting.

In the budgeting class, Dr. Feathers learned that budgeting is one of the most important elements in every financial plan. During the class, he was asked the following questions:

1. What is Budgeting?

2. Is Budgeting Difficult?

3. What is the process of creating a budget?

Part II - Creation of a Budget

Dr. Feathers learned a great deal in the class and he was requested to provide a step by step process of creating a budget. As you are physician and have been promoted to a Director position of a physician group practice facility.

For Part II of the final, students are required to answer the following questions pertaining to the development of a budget

Present the following information.

1. What is included in gathering every financial statement you can? What areas would you include in this area? Example: Bank statements, bills, utilities.

2. Would you record all of the sources of income?

3. Is it important to create a list of expenses per month?

4. Why would the Dr. Feathers break down expenses into the fixed and variable categories?

5. Is it important to add up your monthly income and monthly expenses?

6. Why document any changes that are made to expenses?

7. Does reviewing your budget every month an important part of the process?