Economic resources that have expected future benefits to the business.P A R T Record Financial Operations II 25 Assets, Liabilities, and Net Worth 3 C H A P T E R OVERVIEW Assets, liabilities, and net worth are part of the language of finance.
Complete Part I by computing contractual allowances.
Complete Part II by indicating the cost center and the correct revenue source.
Complete Part III by indicating the cost center for the expense.
Post your assignment as a Microsoft Excel spreadsheet.
SPREADSHEET in the ATTACHMENTS BELOW
Note.. When you open spreadsheet parts I & II are at the bottom lefthand corner. Click on tabs.
Resource University Material:
Chapters are attached (if needed).
P A R T Record Financial Operations II 25 Assets, Liabilities, and Net Worth 3 C H A P T E R OVERVIEW Assets, liabilities, and net worth are part of the language of finance. As such, it is important to understand both their composition and how they fit together. Short definitions appear below, followed by examples. Assets Assets are economic resources that have expected future benefits to the business. In other words, assets are what the organization owns and/or controls. Liabilities Liabilities are “outsider claims” consisting of economic obligations, or debts, payable to outsiders. Thus, liabilities are what the organization owes, and the outsiders to whom the debts are due are creditors of the business. Net Worth “Insider claims” are called owner’s equity, or net worth. These are claims held by the owners of the business. An owner has a claim to the entity’s assets because he or she has invested in the business. No matter what term is used, the sum of these claims reflects what the business is worth, net of liabilities—thus “net worth.” The Three-Part Equation An accounting equation reflects a relationship among assets, liabilities, and net worth as follows: assets equal After completing this chapter, you should be able to 1. Recognize typical assets. 2. Recognize typical liabilities. 3. Understand net worth terminology. 4. See how assets, liabilities, and net worth fit together. P r o g r e s s N o t e s liabilities plus net worth. The three pieces must always balance among themselves because this is how they fit together. The equation is as follows: Assets Liabilities Net Worth. WHAT ARE EXAMPLES OF ASSETS? All of the following are typical business assets. Examples of Assets Cash, accounts receivable, notes receivable, and inventory are all assets. If the Great Lakes Home Health Agency (HHA) has cash in its bank account, that is an economic resource— an asset. The HHA is owed money for services rendered; these accounts receivable are also an economic…
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