Hsa525 Assignment#1

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Assignment #1 – Brandywine Homecare Destyne Quarles Dr. James W. Coon, Jr. HSA525 – Health Financial Management January 22, 2012 Introduction It is without question that in order to understand an organization, you must know and understand the numbers. This assumption in essence is why proper and ethical accounting is so important to all businesses both big and small. Accounting consists of three basic activities which include identification, recording and communication of the economic events of an organization to interested users. To identify economic events, a company must first determine the economic events relevant to its business. Once a company identifies the economic events, it records those events in order to provide a history of its financial activities. It is important to note here that recording consists of keeping a systematic, chronological summary of events measured in the accepted currency. Finally, the company communicates the collected information to interested users by means of accounting reports. The most common of these reports are called financial statements. To make their reports meaningful, a company reports the recorded data in a standardized way according to generally accepted accounting principles (GAAP). The remainder of this paper will illustrate examples of the income statement and balance sheet. In addition, this paper will discuss a few basic accounting principles along with a brief discussion of the difference in how equity is reported for an owner invested firm versus a not-for-profit entity. Construct Brandywine’s 2007 Income Statement In order to construct Brandywine’s 2007 income statement, one must first collect the data required for reporting. The income statement reports the success or profitability of a company’s operations over a specific period of time (The Income Statement, 2011). The heading

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