Answer the Questions Essay Example
1. There exist some differences in the financial reports of non profit entity in comparison to the report of profit entity so that the user of financial statement can understand the type of organization and also helps to find out the objective of the organization. Some of the differences seen in the financial statement of profit and non profit entity are as
Non profit organization works with the purpose of not making profits so the total receipts of the organization is clubbed under one head and is shown as a fund accounts. These funds are used for similar purpose compared to profit organization that works under a different pattern of accounting and records earnings under a different head (Elmerraji, 2011).
Another difference in the report is that profit entity prepares income statement, balance sheet and cash flow statement whereas non profit organization prepares statement of activities, statement of net assets and statement of cash flow (Elmerraji, 2011).
Non profit entity also don’t publish their financial statement and is simply called “Report of Consolidated Financial Statement” whereas profit entity publish their statement and the user can attend the annual general meeting and raise their opinion and voice (Non profit, 2011).
Another distinguishing factor between the profitable and non profit entity is that non profit organization don’t have to pay taxes. As a result of this their financial statement doesn’t have the tax bracket which is present in the financial statement of profit entities.
Thus, there are widespread differences that exist between the financial report of profit and non profit entity.
2. Managament accounting is a process which uses the financial accounting records in their planning process so that the decisions made are better and sounder. The basic purpose of ensuring proper financial accounting system that is fair and accurate is to help in decision making, planning and determining the standards based on which the performances will be evaluated. Since, the accounting system uses methods which record the inputs and outputs in a way that provides the best cost effective way which will ensure good prospects for the company in the future (Baker & Baker, 2011)
Companies rely on the financial accounting standards and work in close collaboration with the management accountants to ensure that the company grows and earns profit. This thereby increases the value of financial accounting which needs to be true and fair. The accounting report mainly concentrates on the internal data of the company based on the past performance of the organization it thereby facilitates both short and long term planning for the organization. Since, preparation of data and report is an area which management accountants rely on it thereby helps the management to perform four functions as budgeting, performance evaluation, cost management and asset management (Baker & Baker, 2011).
The growth in cost and taxes has made it imperative for organization to be able to evaluate it before hand which can be done based on the past performances. The data regarding the same is available in the financial accounting reports which thereby need to be fair and accurate. This will help the management to provide recommendations for the future based on which the management will take future actions (Singh, 2011).
3. The different departments in the hospital receive the financial information through the system which they are connected. Hospitals have several department which works in their area of specialization. To ensure that each department receives the financial information a master data report is prepared by the management. This report contains the relevant financial information which is valuable for each department.
The different department by using the same interface on their computers is able to receive the informations. Since, all the departments are connected using the same server so passing of information from one department to the other is an easy process. This helps the management as they can pass the same information to the entire department. This process ensures that the communication process is clear and the entire department has the same information.
The management also makes it a point to ensure that while information is passed to the department a careful analysis and the main highlights of the financial information is gathered and kept together. This information is passed on to the respective department so that they are able to get an overview of the entire financial information and a detailed analysis of their financial information for their concerned department can be gathered through the common server which the hospital uses.
The entire process thus helps to ensure that all relevant financial information pertaining to the different department is passed on easily and helps to increase the viability and relevance of the financial information.
Baker, J. J., & Baker, R. W. (2011). Health care finance: Basic tools for nonfinancial managers 3rd ed. Sudbury, MA: Jones & Bartlett Publishers
Elmerraji, J. (2011). Navigating Government & Non Profit Financial Statement. Retrieved on June 3, 2011 from http://www.investopedia.com/articles/basics/07/government_nonprofit_statements.asp
Non Profit. (2011). What is the difference between profit and not for profit groups? Retrieved on June 3, 2011 from http://www.ourcommunity.com.au/boards/boards_article.jsp?articleId=1309
Singh, V. (2010). Why it is important that financial accounting system reports are fair? Retrieved on June 3, 2011 from http://www.financebis.com/20100928/why-is-it-important-that-financial-accounting-system-report-performance-fairly-and-factually/
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