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Q A financial statement is prepared monthly for our center. And inevitably, at least one physician owner asks, "Is it right?" How do I answer this question?
A Trying to read a financial statement is difficult, even for CPAs. As the administrator, there are a few things you can check for accuracy. First, find out whether the financial statement's accounting is accrual-based (most are, and yours should be if it isn't) or cash-based.
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Financial Statements
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ACCRUAL-BASED |
? records accounts receivable, monthly charges and contractual adjustments from insurance companies, and expenses for the month even if not yet paid |
CASH-BASED |
? records your center's fee income only when it is received in cash, which could be months after the surgery happened
? records your expenses when paid, even though the expense could be related to last month |
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