Description
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A basic overview of the accounting equation and how it is used in Profit Diagnostix
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Instructions
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Financial information only |
Assets = Liabilities + owners equity
including the profit and loss
Assets+expenses=liabilities+equity+revenue
Instructions
Most Veterinary practices use a Cash accounting system. This recognises revenue and expenses when funds are exchanged.
Accrual accounting requires recording revenues when they are earned and not when they are received in cash, and recording expenses when they are incurred and not when they are paid.Firstly the only true accounting account types are:
Assets, Expenses,Liabilities,Equity,Revenue
Anything else is simply the accounting software developers breaking this rule which is actually wrong.
Cost of sales is actually an expense. It is separated to calculate the gross profit from revenue. These are items that the business purchases and sells on to clients.
Usually included → Drugs, consumables, merchandise, laboratory fees and cremation feesOther income in Profit diagnostix is actually just income .
Other expenses are actually just expenses. Expenses are all the other costs involved in producing the sales including wages, rent, interest and other running costs. In PD we separate some of these expenses to
Assets can also have many categories, but they are just 'assets'. eg fixed assets, non-fixed assets etc, etc.
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