...Accounting Principles Related to Nursing Olasumbo Dada University of Phoenix Abstract The continuing rise in technological advancement in the health care industry has led to a rising cost in the industry. Hospitals and other healthcare sectors face a major challenge in managing the massive change in respect to cost and still being able to provide excellent care for their patients considering the expansion that the industry is continuously facing. As a result, the financial accounting aspect of the healthcare industry needs more attention than ever. The advancement in the financial aspect of healthcare requires more people to assume administrative duties. Cleverly, Song, & Cleverly (2011). For healthcare organizations to function properly in the increasing change in cost, revenue, and reimbursement by third parties, certain principles are necessary to be in place. According to Voelm, K. (2013), some generally accepted financial principles in healthcare are: Accounting Entity, money measurement, duality, cost valuation, stable monetary unit. Accounting principles related to Nursing Accounting Entity: Accounting entity is the part of a business that specializes in economic activities. Once an entity is established, accountants are able to determine the cash flows and transactions that will impact the entity's financial statements. Accountants in organizations focus on accounting entities and report transactions that are related to that entity. Accounting entities control...
Words: 547 - Pages: 3
...Theoretical Structure of Financial Accounting True / False Questions 1. | The primary function of financial accounting is to provide relevant financial information to parties external to business enterprises. True False | 2. | Accrual accounting attempts to measure revenues and expenses that occurred during accounting periods so they equal net operating cash flow. True False | 3. | The FASB is currently the public-sector organization responsible for setting accounting standards in the United States. True False | 4. | The FASB's due process invites various interested parties to indicate their opinions about whether financial accounting standards should be changed. True False | 5. | Accounting for stock-based compensation is an area in which the FASB has received little political interference. True False | 6. | The Public Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) changed the entity responsible for setting auditing standards in the United States. True False | 7. | A rules-based approach to standard setting stresses professional judgment as opposed to following a list of rules. True False | 8. | Under federal securities laws, the SEC has the authority to set accounting standards in the United States. True False | 9. | The primary responsibility for properly applying GAAP when communicating with investors and creditors through financial statements lies with...
Words: 17634 - Pages: 71
...Directly or indirectly, financial reporting measurements of performance and financial position affect almost every party. The dispute now surrounds the question of measurement method in financial reporting to as whether a traditional basis of measurement, which is the historical cost should be use or a new basis which is the fair value should be considered. Historical cost accounting records the value of an asset on the balance sheet as the price at which it was originally purchased, which is the date of acquisition. Therefore, it is based on its nominal or original cost. In an era market by the widespread use of complicated financial instruments and risk management strategies that may render yesterday’s price obsolete, some people are questioning...
Words: 1046 - Pages: 5
...Accounting Horizons Vol. 24, No. 3 2010 pp. 471–485 American Accounting Association DOI: 10.2308/acch.2010.24.3.471 COMMENTARY A Framework for Financial Reporting Standards: Issues and a Suggested Model American Accounting Association’s Financial Accounting Standards Committee (AAA FASC) James A. Ohlson, Stephen Penman, Robert Bloomfield, Theodore E. Christensen, Robert Colson, Karim Jamal, Stephen Moehrle, Gary Previts, Thomas Stober, Shyam Sunder, and Ross L. Watts SYNOPSIS: This paper addresses the issues that confront the FASB and IASB in developing a new conceptual framework document. First, we suggest characteristics that a conceptual framework ought to exhibit. Most of these suggestions are based on our critique of the existing framework and the FASB-IASB work in progress. Second, we present a model framework that exhibits these characteristics. We emphasize up front that this framework is quite explicit. It goes to the heart of what a framework document should do: it places specific restrictions on what constitutes admissible accounting standards. The purpose of our effort is to stimulate broad discussion of alternative approaches to foundational documents and to offer a specific example of such an alternative approach. Keywords: FASB; IASB; conceptual framework; accounting standards; financial reporting. JEL Classifications: M40. In 2008, the American Accounting Association’s Executive Committee asked the Financial Accounting Standards Committee...
Words: 9116 - Pages: 37
...ACC307 – Accounting Theory Assignment Name: Chun Ho Hui Student ID: na20150418 Case Study 1 Questions 1. Explain why principles-based standards require a conceptual framework. A: Conceptual framework can be defined as “an attempt to define the nature and purpose of accounting” (Team, 2015). Conceptual framework is essential for principle-based standards because it lays out a fundamental structure for principles-based standards. Setting the standard on and relate to an established body of concepts and objectives, enable FASB and IASB to “issue more useful and consistent standards over time” (Essays, 2013). For any future developments or armaments on the standards, the framework will ensure the changes will be within its fundamental concepts and will not get to a personal or an inconsistent standard. ACCA has mentioned “the availability of a conceptual framework could lead to ‘principles-based’ system whereby accounting standards are developed from an agreed conceptual basis with specific objectives” (Team, 2015), which in other words, a consistency on the principle-based standards and agreed on a common ground. Without a sound conceptual framework, principle-based standards could lead to inconsistency for users internally (accounting practitioners) and externally (report readers); bias on the use of standards and standard settings, which leads to misdirection on financial statements; and the difficulty of future developments on the standard itself (not been...
Words: 3325 - Pages: 14
...Accounting Assumptions, Principles, and Constraints The four assumptions used by an accountant are accounting entity, money measurement, going concern, and accounting period. The accounting entity is an assumption that allows the accountant to separate the business transactions from the owner’s transactions. Dealing with the money measurement, “This assumption requires use of monetary unit as a basis of measurement, i.e., the currency of the country where the organization is to report its operations” (HubPages, 2012, pg. 1). Going concern means the business base its operations on future events. The accounting period is the time that the information is prepared and reported on a quarterly or annually bases. The accounting principles consist of four basic parts they are the historical cost principle, matching principle, revenue recognition principle, and full disclosure principle. When dealing with historical cost principle the assets are altered if changes occur in the market value but no adjustments are made. Matching principles compare the revenues and expenses that was earned and occurred within that time period. Revenue recognition principle takes place when a business has all the revenue needed. The information is reported under the earned column on the books. The full disclosure principle is kicks in when the information concerning business entity is written in a comprehensible form. Constraints of accounting are based on “The limitations to providing financial...
Words: 310 - Pages: 2
...C H A P T E R 2 CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING LEARNING OBJECTIVES After studying this chapter, you should be able to: •1 •2 •3 •4 Describe the usefulness of a conceptual framework. Describe efforts to construct a conceptual framework. Understand the objective of financial reporting. Identify the qualitative characteristics of accounting information. Define the basic elements of financial statements. •6 •7 Describe the basic assumptions of accounting. Explain the application of the basic principles of accounting. Describe the impact that constraints have on reporting accounting information. •8 •5 What Is It? Everyone agrees that accounting needs a framework—a conceptual framework, so to speak—that will help guide the development of standards. To understand the importance of developing this framework, let’s see how you would respond in the following two situations. SITUATION 1: “Taking a Long Shot . . . ” To supplement donations collected from its general community solicitation, Tri-Cities United Charities holds an Annual Lottery Sweepstakes. In this year’s sweepstakes, United Charities is offering a grand prize of $1,000,000 to a single winning ticket holder. A total of 10,000 tickets have been printed, and United Charities plans to sell all the tickets at a price of $150 each. Since its inception, the Sweepstakes has attracted area-wide interest, and United Charities has always been able to meet its sales target. However, in the...
Words: 22128 - Pages: 89
...Generally Accepted Accounting Principles Paper The term “generally accepted accounting principles” (GAAP) has a specific meaning for accountants and auditors, established by the Federal Accounting Standards Advisory Board (FASAB) in October 1999. According to the FASAB which is responsible for identifying the “GAAP hierarchy” for federal reporting entities. “The GAAP hierarchy consists of the sources of accounting principles used in the preparation of financial statements of federal reporting entities that are presented in conformity with GAAP and the framework for selecting those principles. The hierarchy lists the priority sequence of sources that an entity should look to for accounting and reporting guidance; this language is used in the business of health care (fasab, 2011).” The five principles of accounting include accounting entity, money measurement, duality, cost valuation, and stable monetary unit (Cleverly, Song, & Cleverly, 2011). This paper will include a brief description of each principle with the intention behind the principle and relate each principle to health care. Accounting Entity According to Cleverly, Song, and Cleverly (2011) the accounting entity is an organization for which financial information is recorded and reported. In health care, accounting entities may include surgical centers, hospitals, clinics, or others that are part of a larger corporation. Problems may occur when accounting entities differ. An example of accounting entity is a physician...
Words: 774 - Pages: 4
...Property, Plant and Equipment Property, Plant and Equipment I- Nature of Accounting Issues Businesses purchase and use a variety of fixed assets, such as equipment, furniture, tools, machinery, buildings, and land. These fixed assets are long-term or relatively permanent assets. Also, they are tangible assets because they exist physically. They are owned and used by the business and are not offered for sale as part of normal operations. Perhaps the most descriptive titles these assets are known under are plant assets or property, plant and equipment. Depending on the industry, the plant assets of a business can be a significant part of its total assets. That is why the accounting for these long-term assets has important implications for a company’s reported results. In this paper, we discuss the proper accounting for the acquisition, use, and disposition of property, plant, and equipment. Before going over a brief overview of the nature of accounting issues, we ought to take a deeper look at what plant assets really are. The major characteristics of property, plant, and equipment are as follows: * They are acquired for use in operations and not for resale. Only assets used in normal business operations are classified as property, plant, and equipment. For example, an idle building is more appropriately classified separately as an investment. Also, land developers or sub dividers classify land as inventory. * They are long-term in nature and usually depreciated...
Words: 4741 - Pages: 19
...IFRS VS.GAAP Tyana Campbell ACC/291 November 12, 2014 Habib Ousmane Diallo The International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) are rules and guidelines established to attempt to standardize accounting and recording practices across the United States and Internationally. International Financial Reporting Standards (IFRS) is a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS uses fair-value accounting of assets and liabilities. GAAP also known as Generally Accepted Accounting Principles which is a common set of accounting principles, standards and procedures that companies use to compile their financial statements. Generally an accepted accounting practice is a combination of authoritative standards and the commonly accepted ways of recording and reporting accounting information. Some differences between IFRS and GAAP is that IFRS is considered more of a principle based accounting standard used in more than 110 countries where as GAAP is considered more rule based and is used generally within the United States. By being more principle based, IFRS represents and captures the economics of a transaction better than U.S. GAAP. Under GAAP, the research is more focused on the literature whereas under IFRS, the review of the facts pattern is more through. Investopedia states another difference between...
Words: 889 - Pages: 4
...Abstract There are many issues surrounding fair value accounting, this assignment concerns about the discussion of fair value measurement under both the International Accounting Standard Board (IASB) and US national standard-setter, the Financial Accounting Standards Accounting (FASB). So far, IASB and FASB have created a uniform framework for how to measure fair value for entities around the world. By publishing IFRS 13 Fair Value Measurement, the IASB established a single source of guidance under IFRS for all fair value measurements. After searching relevant sources from financial books and economic websites, some of the issues about fair value accounting have been clarified and analysed. This assignment provides a better understanding of the joint work between IASB and FASB, the definition of fair value under both standards, the relevant issue about IFRS 13 and why accounting differences exist. A. Explain the purpose of the Memorandum of Understanding between the IASB and the US national standard-setter, the Financial Accounting Standards Board (FASB). Theoretically, A Memorandum of Understanding is a document that involved a bilateral or multilateral agreement between parties (Wikipedia 2011). In this particular research essay, the Memorandum of Understanding is a convergence process that both the International Accounting Standard Board (IASB) and US national standard-setter, the Financial Accounting Standards Accounting (FASB) would take steps to balanced the reciprocal...
Words: 3705 - Pages: 15
...A conceptual framework for financial reporting A conceptual framework, in the field we are concerned with, is a statement of generally accepted theoretical principles which form the frame of reference for financial reporting. The financial reporting process is concerned with providing information that is useful in the business and economic decision-making process. Therefore a conceptual framework will form the theoretical basis for determining which events should be accounted for, how they should be measured and how they should be communicated to the user. Although it is theoretical in nature, a conceptual framework for financial reporting has highly practical final aims. The danger of not having a conceptual framework is demonstrated in the way some countries' standards have developed over recent years; standards tend to be produced in a haphazard and fire-fighting approach. Where an agreed framework exists, the standard-setting body act as an architect or designer, rather than a fire-fighter, building accounting rules on the foundation of sound, agreed basic principles. The lack of a conceptual framework also means that fundamental principles are tackled more than once in different standards, thereby producing contradictions and inconsistencies in basic concepts, such as those of prudence and matching. This leads to ambiguity and it affects the true and fair concept of financial reporting. Another problem with the lack of a conceptual framework has become apparent in the...
Words: 1910 - Pages: 8
...the international level around the globe. It examines the Financial Accounting Standards Board, the International Accounting Standards Board, the differences between the two boards, and the joint conceptual framework project that is in the process of being formulated. The history of the FASB and the different responsibilities it takes on itself regarding the conceptual framework and other issues are mentioned in the research results. The IASB and many of the elements of financial statements are defined within the paper. The joint project between the FASB and IASB is researched and the process it is currently going through on its way to completion is written out in detail. The research paper covers all of these topics for the purpose of informing and educating others. The underlying principles and objectives of financial accounting and reporting that guide and direct the Financial Accounting Standards Board (FASB) in setting Generally Accepted Accounting Principles (GAAP) are collectively referred to as the conceptual framework. Although the conceptual framework is not regulatory by nature, it does act as the basis for the laws and rules that are set. It is in place in order to assist in the creation of consistent standards across the board. It lays out the objectives of financial accounting and reporting so that changes to GAAP will be sure to further those stated objectives. The seven Statements of Financial Accounting Concepts (SFACs) issued by the FASB comprise the conceptual...
Words: 3566 - Pages: 15
...A. The prospective criticism of Fair Value Measurement 1. Analysis of nature of Fair Value Measurement The implement basis of SFAS157 is in an efficient market. Its hierarchy of fair value measurement confirms the priority of market price for the same or similar position. But under the credit crisis, entity will expect to reverse the unrealized losses partially at present or totally in the future. Based on this assumption, some entities preferred to report amortized costs or level 3 mark-to-model fair values, arguing that level 2 mark-to–market fair values will raise larger unrealized losses. [8] In an illiquidity market, the impairment of assets caused potential risk of system and overreaction of investors. The substantial decreasing values enter into the unrealized losses, which further force investors sell their assets for financing in order to mask financial statements or to accord with the investment policy. The consequence is that counterparties are unwilling to transact with those whose assets are continually impaired. In this situation, investment having high leverage will undertake the crisis of liquidity. The bankruptcy of these investment banks may cause the liquidation of hedge fund or other issuing bond, as well as the investment loss of their counterparties. When crisis extends, so called fair value is no longer “fair”. [9] In the prosperous economic market, the carry out of fair value measurement follows the bubble price, relative to the basic value of assets...
Words: 884 - Pages: 4
...CHAPTER 2 CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING Show Me the Earnings! The growth of new-economy business on the Internet has led to the development of new measures of performance. When Priceline.com splashed onto the dot-com scene, it touted steady growth in a measure called “unique offers by users” to explain its heady stock price. To draw investors to its stock, Drugstore.com focused on the number of “unique customers” at its website. After all, new businesses call for new performance measures, right? Not necessarily. In fact, these indicators failed to show any consistent relationship between profits and website visits. Eventually, as the graphs below show, the profits never materialized, and stock prices fell. The lesson here: Although the new economy may require some new measures, investors need to be careful not to forget the reliable traditional ones. PRICELINE.COM Net unique offers by users 3.0 million 2.0 1.0 0 I II III IV 1999 I II III IV 2000 DRUGSTORE.COM Unique customers 2.0 million 1.5 1.0 0.5 0 I II III IV 1999 I II III IV 2000 Stock price $120 a share 80 40 0 I II III IV 1999 I II III IV 2000 2000-IV close $2.13 Stock price $40 a share 30 20 10 0 I II III IV 1999 I II III IV 2000 2000-IV close $1.03 Source: Story and graphs adapted from Gretchen Morgenson, “How Did They Value Stocks? Count the Absurd Ways,” New York Times (March 18, 2001), section 3, p. 1. 34 Copyright ©2008 John Wiley & Sons, Inc. Preview of Chapter 2 ...
Words: 23554 - Pages: 95
