Question

1. What is the basis of accounting for hospitals and other health care organizations?
2. What organizations are responsible for setting Category A GAAP?
3. What are the components of the equity section of the financial statements for the following types of organizations:
   1. Not-for-profit, Business-Oriented Organizations
   2. Investor-Owned Health Care Enterprises
   3. Government Health Care Organizations

Answer 1

ANSWER-1) Both governmental owned and private hospitals and other health care use the accrual basis of accounting and the economic resources measurement focus. The accrual method of accounting records revenues when they are earned and expenses when these are incurred. On the cash-basis balance sheet; unlike the accrual balance sheet, accounts receivable never appear thus the physician will never notice a calculation of the collectability of the receivables as an asset. Moreover they are obligated to use accrual accounting for reporting or tax purposes.