Health Care Case Study: Financial Statements Essay Example
Health Care Case Study: Financial Statements
From the financial accounts, we are able to note existing differences between audited and unaudited books of Patton-Fuller Community Hospital. In the first case, for the Statement of revenue and expense, we note that the provision for doubtful accounts for the year 2009 has been adjusted because it was underestimated by the accountants. This is an oversight that made the company’s financial statements have a less amount and thus, added the value of debts on the balance sheet, but should do the opposite (ACCA UK). The accounts show that the provision made on doubtful debts for the year 2009 in the unaudited accounts was less by $1000 which eventually affects the calculations and figures of the balance sheet. Such mistakes should not be made by professionals since they will affect the capital and operations of the business for the coming financial period.
Consequently, both operating and net incomes for the year 2009 differed because of the underestimation done. For the audited books, the amounts were fair because the adjustments were made and thus, dividends and retained earnings for the company shareholders are bound to reduce (ACCA UK). Following the reduction of provision for doubtful accounts made in the statement of revenue and expenses, the amount reflected on the balance sheet had to be adjusted. This is due to the $1000 not added to the debtor’s accounts not yet received. Therefore, total current assets and assets amounts had to reduce. Consequently, the amount of retained earnings at the end of the year reduced. The Statement Cash Flows also show that the company is going at a loss, but compared to the year 2008, the amounts have reduced and thus, the hospital is fairing on well with its activities of promoting good health to its patients and or clients.
ACCA UK. Retrieved 11th June, 2011 from <http://www2.accaglobal.com/documents/AUA>
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