Question

What is better for a Health Care organization, the accrual or cash basis of accounting? Why?

Answer 1

Cash basis records transaction when it is actually paid or received however accrual record transaction when it is liable to be recorded irrespective of the fact that cash is received or not.

If we talk about larger organization in health care industry they are most likely to use accrual basis because it gives more clear picture of the entity. However small entities and medical practitoner often uses cash basis as it is easy to use and does not require techincal knowledge. It is always better to use accrual basis of accounting to actually analyze data and reports.