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Business Finance EBK HEALTHCARE FINANCE: AN INTRODUCTION

The reporting of bad debt losses, charity care and contractual discount and allowance on the income statement. Introduction: Income statement is also known as profit and loss account which reflects the expenses incurred and revenue earned by the company in a specific period of time. It also reflects how the transformation of revenue takes place into net profit or income. It is one of the important financial statements which depict the financial performance of the company in a particular accounting period. The contractual discount and allowances and charity care are not reported on the income statement, whereas bad debt losses are reported as an expense on the income statement. Contractual discounts and allowances reflects the difference between the bill raised by the healthcare provider and the amount which is contractually rendered by the government agency or third party insurer in accordance with a contract agreed with them. The revenue that is collectible or realizable is only reflected on the income statement. Therefore the revenue from the patient service is reported on the income statement after factoring the contractual discount and allowance and therefore only the expected actual amount of reimbursement is reflected on the income statement. The amount of contractual discount and allowances are shown under notes below the income statement. Charity care is provided to the underinsured or uninsured people in the form of outpatient and inpatient care under the state funded program. The services that are being provided to the patients under charity care are not reflected on the income statement and only represented in the notes below because similar to contractual discount and allowances there is no expectation for the revenue to be collected against the servies provided under charity care. Bad debt losses reflect the amount of accounts receivable which has become partially or totally uncollectable. Bad debt losses are reported on the income statement as operating expenses so that it can be set off against the income earned by the business during the accounting period.

The reporting of bad debt losses, charity care and contractual discount and allowance on the income statement. Introduction: Income statement is also known as profit and loss account which reflects the expenses incurred and revenue earned by the company in a specific period of time. It also reflects how the transformation of revenue takes place into net profit or income. It is one of the important financial statements which depict the financial performance of the company in a particular accounting period. The contractual discount and allowances and charity care are not reported on the income statement, whereas bad debt losses are reported as an expense on the income statement. Contractual discounts and allowances reflects the difference between the bill raised by the healthcare provider and the amount which is contractually rendered by the government agency or third party insurer in accordance with a contract agreed with them. The revenue that is collectible or realizable is only reflected on the income statement. Therefore the revenue from the patient service is reported on the income statement after factoring the contractual discount and allowance and therefore only the expected actual amount of reimbursement is reflected on the income statement. The amount of contractual discount and allowances are shown under notes below the income statement. Charity care is provided to the underinsured or uninsured people in the form of outpatient and inpatient care under the state funded program. The services that are being provided to the patients under charity care are not reflected on the income statement and only represented in the notes below because similar to contractual discount and allowances there is no expectation for the revenue to be collected against the servies provided under charity care. Bad debt losses reflect the amount of accounts receivable which has become partially or totally uncollectable. Bad debt losses are reported on the income statement as operating expenses so that it can be set off against the income earned by the business during the accounting period.

Solution Summary: The author explains that the income statement reflects the expenses incurred and revenue earned by the company in a specific period of time. The contractual discount and allowances and the revenue that is collectible or realizable are not reflected on

EBK HEALTHCARE FINANCE: AN INTRODUCTION

EBK HEALTHCARE FINANCE: AN INTRODUCTION

6th Edition

ISBN: 9781567937428

Author: Gapenski

Publisher: YUZU

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Chapter 3, Problem 8.2STQ

Chapter 3, Problem 8.4STQ

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Chapter 3 Solutions

EBK HEALTHCARE FINANCE: AN INTRODUCTION

Ch. 3 - Prob. 1.1STQ Ch. 3 - Prob. 1.2STQ Ch. 3 - Prob. 2.1STQ Ch. 3 - Prob. 2.2STQ Ch. 3 - Prob. 2.3STQ Ch. 3 - Prob. 3.1STQ Ch. 3 - Prob. 3.2STQ Ch. 3 - Prob. 3.3STQ Ch. 3 - Prob. 3.4STQ Ch. 3 - Prob. 3.5STQ

Ch. 3 - Prob. 4.1STQ Ch. 3 - Prob. 4.2STQ Ch. 3 - Prob. 4.3STQ Ch. 3 - Prob. 5.1STQ Ch. 3 - Prob. 5.2STQ Ch. 3 - Prob. 5.3STQ Ch. 3 - Prob. 6.1STQ Ch. 3 - Prob. 6.2STQ Ch. 3 - Prob. 7.1STQ Ch. 3 - Prob. 7.2STQ Ch. 3 - Prob. 7.3STQ Ch. 3 - Prob. 8.1STQ Ch. 3 - Prob. 8.2STQ Ch. 3 - Prob. 8.3STQ Ch. 3 - Prob. 8.4STQ Ch. 3 - Prob. 9.1STQ Ch. 3 - Prob. 9.2STQ Ch. 3 - Prob. 9.3STQ Ch. 3 - Prob. 10.1STQ Ch. 3 - Prob. 10.2STQ Ch. 3 - Prob. 11.1STQ Ch. 3 - Prob. 11.2STQ Ch. 3 - Prob. 12.1STQ Ch. 3 - Prob. 12.2STQ Ch. 3 - Prob. 12.3STQ Ch. 3 - Prob. 13.1STQ Ch. 3 - Prob. 13.2STQ Ch. 3 - Prob. 13.3STQ Ch. 3 - Prob. 13.4STQ Ch. 3 - Prob. 14.1STQ Ch. 3 - Prob. 14.2STQ Ch. 3 - Prob. 14.3STQ Ch. 3 - Prob. 15.1STQ Ch. 3 - Prob. 15.2STQ Ch. 3 - Prob. 16.1STQ Ch. 3 - Prob. 16.2STQ Ch. 3 - Prob. 3.1Q Ch. 3 - Prob. 3.2Q Ch. 3 - Prob. 3.3Q Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Prob. 3.6Q Ch. 3 - Prob. 3.7Q Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Prob. 3.1P Ch. 3 - Prob. 3.2P Ch. 3 - Prob. 3.3P Ch. 3 - Prob. 3.4P Ch. 3 - Prob. 3.5P Ch. 3 - Prob. 3.6P Ch. 3 - Prob. 3.7P Ch. 3 - Prob. 3.8P Ch. 3 - Prob. 3.9P

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