PowerPoint® to accompany
Medical Assisting
Chapter 18
Second Edition
Ramutkowski  Booth  Pugh  Thompson  Whicker
Copyright © The McGraw-Hill Companies, Inc. Permission required for reproduction or display.
1
Accounting for the Medical Office
Objectives
18-1 Describe traditional bookkeeping system, including single
entry and double entry.
18-2 Define a pegboard system.
18-3 Explain the benefits of performing bookkeeping tasks on the
computer.
18-4 List banking tasks in a medical office.
18-5 Describe the logistics of accepting, endorsing, and
depositing checks from patients and insurance companies.
18-6 Reconcile the office’s bank statements.
18-7 Give several examples of disbursements.
2
Accounting for the Medical Office
Objectives
18-8 Record disbursements in a disbursement journal.
18-9 Set up and maintain a petty cash fund.
18-10 Create employee payroll information sheets.
18-11 Compute an employee’s gross earnings, total
deductions, and net earnings.
18-12 Prepare an employee earnings record and payroll
register.
18-13 Set up the practice’s tax liability accounts.
18-14 Complete federal, state, and local tax forms.
18-15 Submit employment taxes to government agencies.
18-16 Describe the basic parts of an employment contract.
3
Introduction

Bookkeeping

Systematic record of
business
transactions.
You need an
understanding of basic
accounting system and
certain financial
management skills.
A medical practice is a business, its
income must exceed its expenses!
4
Establishing Procedures





Maintain the practice’s
bookkeeping.
Be consistent.
Use check marks as
you work to avoid
errors.
Write clearly with same
type of pen.
Double check your
work frequently.
5
Bookkeeping Systems

Single entry system





Daily log
Patient ledger cards
Checkbook registers
Payroll records
Petty cash

Double-entry



Assets – goods or
services
Liabilities – amounts
owed by the practice
Both sides of the
accounting equation
must balance
Assets = liabilities + owner equity
6
Pegboard System




Each transaction on four different forms
Reduces errors and saves time
Called “one-write” system
Uses lightweight board with pegs




Daily log sheets
Patient ledger card
Charge slips
Deposit slips
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Pegboard Processes
1.
2.
3.
4.
5.
6.
At start of day
Upon patient arrival
Attaching the charge slip
Before the patient leaves
Payments after the patient
visit
End of day
8
Bookkeeping On the Computer
 Benefits
• Saves time
• Performs mathematic calculation
• Software for taxes,
calculating liabilities
9
Banking for the Medical Office

Banking tasks





Writing checks
Accepting checks
Endorsing checks
Making deposits
Reconciling bank
statements
Keep all bank materials secure because they
represent the finances of the practice.
10
Checks



A bank draft or order for
payment.
Person who writes the
check is payer
A check must:





Be written and signed
Include amount to be paid
Be made payable to payee
Be made payable on demand
Include the name of the
bank that is directed to
make payment.
11
Other Negotiable Papers

Cashier Check


Certified check


Check issued on bank paper and signed by
bank representative.
Payer’s check written and signed by a payer
and stamped “certified” by the bank
Money order

Certificate of guaranteed payment
12
Check Codes

American Banking
Association (ABA)
number



Appears as a fraction
60-117/310
Magnetic ink character
(MICR) code

Numbers and
characters at the
bottom of check
13
Types of Checking Accounts

Personal accounts


Business accounts


Physician personal account for private financial
matters
For office expenses
Interest-earning account

Used for paying special expenses such as taxes.
14
Accepting Checks

Check for:




Do not accept third-party check.


Correct date
Correct amount
Signature
One made out to the patient rather than the practice.
Do not accept a check marked “Payment in
Full”unless it actually does pay the complete
outstanding balance.
15
Endorsing Checks





Write the name of the
doctor or practice on the
back
Include “For Deposit Only”
Add bank account number.
Use ink or rubber stamp
Place endorsement in the
1.5 inch area on the back of
check.
16
Completing the Deposit Slip





Post the payment to the patient ledger card
Put the check with others to be deposited
Fill out a deposit slip
Account number is printed on deposit slips in
MICR numbers that match those on check
Can include computer printed list of checks if
you include a deposit slip
17
Making the Deposit




Plan to make deposits in person
Avoid sending cash through the mail
Obtain deposit receipt
May have to make deposits daily
18
Reconciling Bank Statements



Compare the office’s financial records with
the bank records to ensure they are consistent.
Must be done once a month
Be sure all checks written are the same and all
checks deposited match on both records.
19
Electronic Banking



Basic tasks will be the same as in an office
that uses traditional banking methods
You are still responsible for recording and
depositing checks
Computer software will:



Calculate new balance
Reconciling the office bank statement
Use computer password for security
20
Apply Your Knowledge
What are three things should you add
to the back of a check that you receive
from a patient?
21
Apply Your Knowledge -Answer
What are three things should you add
to the back of a check that you receive
from a patient?
1. Name of the doctor or practice
2. “For Deposit Only”
3. Bank account number
22
Features of Banking Software




Records deposits
Pays bills
Displays
checkbook
Balances
checkbook
23
Managing Accounts Payable



Payments for supplies,
equipment, and practicerelated products and
services
Payroll
Taxes
24
Managing Disbursements

Managing supplies





Usually one person handles
purchasing
Combine orders if possible
Follow practice purchasing
guidelines
Buy from reputable
supplies
Get the best quality and the
amount for which insurance
companies will reimburse
25
Writing Checks
Make sure the checking
account balance will
cover the check you will
write
If you make an error
when completing a
check, write void in ink
across the front of the
check
Have the doctor sign the
check and the invoice.
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Types of Checks
Voucher checks

Standard checkbook
Cashier’s check

Purchased from a bank and signed by the bank official
Counter check

Allows depositor to withdraw funds from her account
only
Traveler’s checks

Used when traveling instead of carrying large amounts
of cash.
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Recording Disbursement




Give each column a
heading
Record each check in
appropriate columns
Determine expense
category of the check
Record the check
amount
28
Managing Petty Cash






To avoid writing checks for such small amounts use
petty cash funds
Usually $50.00
Write a check to “petty cash”
Enter the check in the miscellaneous column of
disbursement records
Get a petty cash voucher when money is removed.
Replace money once a month to keep amount at
$50.00.
29
Understanding Financial Summaries

Statement of Income
and expense


Cash flow statement


Profit and loss
statement
Money available to
cover expenses
Trail Balance

Combined expense
column total equal to
total check amount
column
30
Handling Payroll




Obtaining tax ID
number
Creating employee
payroll information
sheets
Calculating employees’
earnings
Subtracting taxes and
other deductions




Writing paychecks
Creating employee
earnings records
Preparing a payroll
register
Submitting payroll
taxes
31
Handling Payroll Electronically



Create, update, and
delete employee
payroll information
files
Prepare employee
paychecks, stubs and
W-2 forms
Update and print
employee earnings
records

Update all appropriate
bookkeeping records,
such as payroll ledger
and general ledger with
payroll data.
32
Taxes





Calculating and filing
taxes
Setting up tax liability
accounts
Understanding federal
tax deposit schedules
Submitting federal
income and FICA taxes
Submitting FUTA taxes
Click for Larger View
33
More Taxes



Filing an employer’s
quarterly federal tax
return
Handling state and
local income taxes
Filing wage and tax
statements




W-2
W-3
Transmittal of wages
Tax statements
35
Managing Contracts

A written agreement of
employment terms
between employer and
employee.




Include names and
addresses
Considerations
Starting and ending
dates
Signatures of both
parties
36
Medical Assistant Contract

Includes:






Description of your duties and your employer’s
duties
Plans for handling major changes in job duties
Salary, bonuses, and other compensation
Benefits
Grievance procedures
Termination procedures
37
Apply Your Knowledge

What is a W-2?

What is FUTA?
38
Apply Your Knowledge -Answer

What is a W-2?
Shows the employee’s total taxable income
for the year.


What is FUTA?
 Annual
Federal Unemployment Tax Return
39
Summary
Medical Assistant
You will need to understand the proper
management of accounts receivable and accounts
payable.
The use of standard bookkeeping and banking
procedures is necessary to maintain the business of
the office.
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End of Chapter
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