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Similarities between profit and nonprofit organizations
Similarities between for profit and nonprofit
Health care accounting practices and principles
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The calculation of inventory expense on the operations statement and the posted balance on the statement of condition (balance sheet) may be approached in several different ways. List and discuss the various methods of inventory valuation that may be used. Indicate in your response why a certain method may be used in certain situations. What are predominant methods used in health care organizations (tax exempt or for profit) In Inventories are sold, and they are purchased on a continuous basis. Due to the varying market conditions, the prices of the inventories may change and as a result, valuation of inventory is imperative. There are various methods that organizations use in valuing stocks. The most common methods are: LIFO The LIFO approach …show more content…
For instance, the profit making health organizations have the main intention of creating profits for the shareholders while the nonprofit organizations are created to further their mission (Knowing the Differences Between Nonprofit and For-Profit Accounting , 2015). Just the way these organizations differ in their purpose and foundation, they also differ in their accounting procedures. Their financial statements are presented in different ways. The financial statements prepared at the end of a year are also very different. The main reason for these differences is because the two organizations follow different accounting standards. In this part, I will lay an explicit focus on how the two organizations present the various items in the owners’ equity statement (Baker, …show more content…
For example, in a profit making organization, the assets will be classified as either noncurrent assets, intangible assets or as current assets. However, this is not the case in nonprofit healthcare organizations. For nonprofit healthcare organizations, assets are classified as permanently restricted assets, which refers to assets that cannot be used up. These assets can be current or noncurrent assets, but the donor restricts their use. On the other hand, they also have unrestricted assets (Baker, 2013). These are assets that do not have any restriction, and the organization can use them (Baker,
The biblical worldview is essentially the integration of fundamental biblical teachings to become a meaningful and unified response to the routine opportunities and challenges of modern life. An individual wholly inscribed into a biblical worldview projects a belief system that the core purpose of existence is to love and serve the Lord God alone. Essentially, a Christian worldview is formed in reference of the infallible living Word of God (Tackett, 2014). After a believer fully believes the living Word of God then allows it to form the basis of everything in their life. That implies, for instance, that when a believer chooses to pursue Romans 13 to respect people in authority then must take priority in voting and electing new leaders into power. A bible believing person should lead a life that portrays the biblical teachings and truths. As practical Christians our gut reaction should be limited to the biblical established truths (Wayne, 2014).
In order for Jim Turin & Sons, Inc to have used this method of accounting it would have had to match the cost of the merchandise with the revenue earned from the sale. Using the matching of revenue and cost the company would have had to have kept an actual inventory and maintained records of the costs associated with said inventory. Since the costs are not immediately deducted under the accrual method they are deferred to the year when the merchandise is
Inventories: - Perform inventories in a systematic and thorough manner. Otherwise, undiscovered posting errors and operational gains and losses will be compounded. Inventories correct these mistakes by bringing the stock accounting records into line with the true stock position. Inventories will be conducted in a manner that ensures each item is verified at least tri-annually. Results of inventories will be recorded on the Navy ERP stock records within 3 workdays after completion of the inventory.
Writing has always been my passion. With this passion I have discovered other artistic talents I possess. It has lead me to a desire to start my own publishing and film business. However, I not only wish to further my career, but assist in the artistic growth of Christian teens in my community and beyond with the creation of my own non-profit. This non-profit will aid Christian teen artists (ages 12-19), from all art backgrounds, in gaining guidance, knowledge and supplies. It will also aid in growing their skills by teaching them to employ their supplies and knowledge and expanding upon them.
When it comes to inventories, there are many significant difference between reporting standards. US GAAP allows companies to use the LIFO, FIFO or weighted average cost method (ASC 330-10-30-9). IFRS prohibits the use of using the LIFO cost method. This is because using LIFO will increase the COGS therefore decreasing your net profit which, ultimately, reduces the amount of tax a company pays. You can, however, use the FIFO or weighted average cost method (IAS 2
There are three forms of inventory costing methods we tend to use LIFO, FIFO, and weighted average cost. “Average-cost method prices items in the inventory on the basis of the average cost of all similar goods available during the period” (Kiso, weygandt, Warfield 429). The two most common methods used that we are going to discuss are LIFO and FIFO. As the name implies, LIFO stands for last-in, first out, which implies that the last product that is placed on the market is the first one to be sold/ purchased. FIFO meaning first-in, first out is the opposite of LIFO, the first item placed is typically the first item to be sold. These two accounting methods tend to differ under GAAP, which is rule based and IFRS, which is considered to be principle based.
Accounting is a way to provide information that” identifies, records and communicates the economic events of an organization”(Weygandt, J., Kimmel, P., & Kieso, D., 2012). In order to ensure that businesses and accountants produce similar financial statements, they are held to generally accepted accounting principles or GAAP standards (Weygandt, et.al. 2012). In addition to GAAP standards, the Sarbanes-Oxley Act of 2002 was passed by Congress to help reduce unethical behavior by large businesses (Weygandt, et. al., 2012). The combination of the two provides reassurance to stakeholders or interested parties that the financial statements are uniform and provide reliable data. This is of the utmost importance for a business to be successful.
Schofield (2014) researches the difference between public and private company financial reporting. For instance, a private company has fewer consumers reviewing their financial statements, whereas public companies could have multiple consumers reviewing financial statements. In addition, private companies typically have less specialized accounting personnel, whereas public companies will have several. Lastly, Schofield (2014), reviewed the number of amendments proposed and finalized to help benefit private companies financial reporting.
Selecting the valuation method for reporting and valuing is based on key issues relating to the relevance and reliability of the method of accounting for that item. According to finetuning.com (2005) "how you identify items in inventory and determine which have been sold will depend on the nature of the products, the volume of the products, how they are tracked, and inventory rotation." Key factors to consider under the inventory policy are: location of storage facilities, temperature, security, rotation of stock, cost, training, periodic inventories, and control.
Unrestricted net assets: the portion of net assets not temporarily or permanently restricted. (This category may include assets that previously were temporarily restricted, but the donor stipulation has been met, removing the restriction.)
Inventory management is a method through, which a business handles tangible resources and materials to ensure availability of resources for use. It is a collection of interdisciplinary processes including a full circle from the demand forecasting, supply chain management, inventory control and reverse logistics. Inventory management is the optimization of inventories of manufactured goods, work in progress, and raw materials. According to Doucette (2001) inventory management can be challenging at times; however, the need for effective inventory management is largely seeing more as a necessity than a mere trend when customer satisfaction and service have become a prime reason for a business to stand apart from its competition. For example, Wal-Mart’s inventory management is one of the biggest contributors to the success of the company;
Making an analysis of the profitability of the shareholder can be seen that although both companies have similar returns, the source of this return is different.
Inventory can be explained as any assets that are held for future use or sale. Inventories are held for a variety of reasons, such as customer demand for end items, smoothing production, a hedge against stock outs and price increases, and economical purchasing. It is very costly and wasteful to keep large inventory on hand. The new technology and application quantitative tools and techniques for inventory management have permitted decrease in inventory. Top management needs to understand the role that inventories have on a company’s financial performance, operational efficiency, and customer satisfaction and strike the proper balance in meeting strategic objectives. They are responsible in keeping sufficient inventories to meet demand of the customers by sustaining the lower cost as possible. Inventories are required for a business to operate efficiently and effectively. Inventory management is a very significant part of basic operations activities. Most businesses and general organizations obtain most of their revenue through the sale of inventory.
The resources are long term in nature and provide benefits to the organization for many years. Common noncurrent assets are Property, Plant and Equipment, long-term investments and intangible assets, such as copyrights, goodwill and patents. Noncurrent assets are capitalized, which according to Investopedia, means that “the company allocates the cost of the asset over the number of years for which the asset will be in use, instead of allocating the entire cost to the accounting year in which the asset was purchased.” This means that the cost is depreciated over the useful life of the asset. The cost of a noncurrent asset is listed on the balance sheet at carrying cost, or the difference between the purchase price of the asset less depreciation.
The success of a company is very dependent upon its financial accounting. In accounting there are numerous Regulatory bodies that govern the accounting world. These companies are extremely important to a company because they set the standards when it comes to the language and decision making of a company. These regulatory bodies can be structured as agencies, associations, commissions, and boards. Without companies like the Security and Exchange Commission (SEC), The Financial Accounting Standards Board (FASB), the Governmental Accounting Standards Board (GASB), Internal Accounting Standards Board (IASB), Internal Revenue Service (IRS), and other regulatory bodies a company could not make well informed decisions. In this paper the author will look at only four of them.