List and describe the four basic financial statements.

1. List
and describe the four basic financial statements.
The
four basic financial statements include the balance sheet, which presents a
record of an organization’s assets, liabilities, and net assets or equity at a
specific point in time. It is a financial snapshot of the business at a certain
date (Cleverley & Cleverley, 2018, p. 212). The statement of operations
also known as the income statement or income statement of revenues and expenses
details the organization’s revenues and expenses during the accounting period
usually for one year (Cleverley & Cleverley, 2018, p. 212). The statement
of changes in net assets also known as the statement of changes in
shareholder’s equity lists how net assets or equity changed during the period
(Cleverley & Cleverley, 2018, p. 212). The statement of cash flow is the final
primary financial statement. It describes how cash was generated and used
(Cleverley & Cleverley, 2018, p. 212).
2. What
are some ways in which accounting for healthcare organizations (HCOs),
especially not for-profit (NFP) ones, tend to differ from accounting in other
industries?
For-profit corporations keep a balance sheet
that reflects the assets the corporation owns, which can be distributed as
retained earnings to shareholders. Meanwhile, a non-profit keeps a statement of
financial position, which reflects the assets on hand that can be used to
further the mission of the organization. Equally, a for-profit uses its
accounting system to track net income, whereas a non-profit track the excess of
revenues over expenditures (Masters, 2019). For-profit companies track revenue
and expenses typically related to the sale of products and services in a
general ledger, which is a single, self-balancing account that represents the
business activity of a single entity. A nonprofit doesn’t sell goods and
services for a profit that can be tracked within an ordinary chart of accounts
in a general ledger. Normally, a nonprofit’s revenue is made up of donations
and grants. Hence, a nonprofit’s accounting system is usually a series of
general ledgers, or funds, which enable the organization to track revenue and
expenses from where it all began (Masters, 2019).
3. What
are the primary responsibilities of a financial manager?
The
most important responsibility of a financial manager is effectively making
financial decisions. The rising importance of financial and cost criteria in
healthcare decision making is a factor creating the need for more knowledge of
financial information (Cleverley & Cleverley, 2018, p. 4). Financial
managers are responsible for the financial health of an organization. They
produce financial reports, direct investment activities, and develop strategies
and plans for the long-term financial goals of their organizations. Financial
Executives International categorized financial management as either
controllership or treasurer ship (Cleverley & Cleverley, 2018, p. 7).
4. What
are the primary uses of financial information?
The
primary uses of financial information are evaluating the financial conditions
of an entity, evaluating stewardship within an entity, assessing the efficiency
of operations, assessing the effectiveness of operations, and determining the
compliance of operations with directives (Cleverley & Cleverley, 2018, p.
5).

References
Cleverley, W. O. & Cleverley, J.O. (2018).
Essentials of healthcare finance (8th ed.). Sudbury,
MA: Jones and Bartlett
Learning.
Masters, T. (2019, March 12). The Major Accounting
Differences Between Profit & Non-Profit
Organizations. Small
Business – Chron.com. https://smallbusiness.chron.com/majoraccounting-d ifferences-between-profit-non-profit-organizations-26257.html

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