Components of the Balance Sheet

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This is a textbook discussion.

Please review the topic in the textbook and discuss. (Chapter 4).

You may use the textbook as a reference for this assignment but you must use a second reference source. Please use personal experiences and, if applicable, discuss how the pandemic may impact the topic.

TEXTBOOKS: Managerial Accounting For The Hospitality Industry, Dopson, L. & Hayes, D. 2nd Ed

Type of assignment: Essay

Subject: business

Pages: 1/275


Paying by the Rules.

The accrual principle is income that is recorded once services have been rendered. In health care
accrual principle is used since it provides accuracy in reports over a long period of time. The
principle will be different when used by an individual given that when income is received by one
especially salary it’s recorded as revenue received.

The expenses are also recorded as they happen to maintain accuracy. This is different as used in health care setting since expenses received are usually consolidated to be able to meet financial obligation at the end of the set period usually per month. It’s therefore different since income received is usually recorded on daily basis in order to generate an accurate report in the long run (Donal & Cebenoyna, 2007).

Financial statements are used by organizations to provide information concerning the financial
performance and fiscal health of the company. Financial reports are used by investors in health
care to evaluate the current and past financial position of an organization including its prospective performance.

Financial statements, therefore, allow health care setting to compare its performance from those of others in order to allow the firm to be in a position to conduct valuing for its stock worth. Different financial statements are used by companies including Balance sheet, cash flow statement and income statement (Donal & Cebenoyna, 2007).

Income statements reports reveal the amount of revenue an organization generated for a certain
period of time, its profits and losses and the expenses incurred by the company. Income
statements report in health care allow organizations to know if they are making profit or not or
are in a position to perform their financial obligation.

Balance sheets allow an organization to be aware of revenue done on each specific date. It also shows the company assets, liabilities and its equity. It, therefore, allows health care reporting by firms to know areas where it can use its assets to acquire revenue through selling it. Cash flow statements show the amount of incoming cash and outgoing money in an organization.

Cash flow statements, therefore, shows the money being circulated in within an organization and thus points out the report that the organization is able to meet its financial obligations including providing the required services (Donal & Cebenoyna, 2007).


Donal, B., & Cebenoyna, F. (2007) Alternative evidence on financial analysts’ use of financial
statement information. Review of Accounting & Finance, 442

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