Super Simple Accounting for Healthcare Professionals.
3 Financial Statements Explained:
1. Balance Sheet: Similar to an individual's 'Net Worth.' It is a 'snapshot' in time.
The balance sheet takes into account Assets, Liabilities and Shareholders Equity (or Net Assets if a Non-Profit Organization).
Examples of Assets are Cash, Buildings, Accounts Receivable and Investments.
Examples of Liabilities are unpaid Expenses, Accounts Payable and Debt.
2. Income Statement: Similar to an individual's personal 'Budget.'
The income statement is Revenue minus Expenses equals Profit.
Another name for revenue is 'Sales.'
Sales minus Cost-of-Goods-Sold (C.O.G.S.) equals Gross Profit
Gross Profit minus Operating Expenses (Sales, General & Administrative, Research & Development) equals Operating Income.
Operating Income minus Non-Operating Expenses (interest payments on Debt) equals Pre-Tax Income.
Pre-Tax Income minus Taxes equals Net Income = Profit = Earnings
3. Cash Flow Statement: Similar to an individual's 'Checking Account.'
There are several categories of money coming in to and leaving out of a 'Checking Account' for an organization.
Operating Activities.
Investment Activities.
Financing Activities.
Video includes an example of how an Income Statement can be 'spun' to make a hospital look 'poorer' than it actually is.
Sources:
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