Running head: HAPPY HOSPITAL
Happy Hospital Scenario
University of Phoenix
November 2, 2009
Happy Hospital Scenario
Happy Hospital wants to start preparing for the new year. The organization are to prepare financial statements for the end of 2007 year and to determine if the organization has the can purchase much needed items. This paper answers the questions, what is budge performance report What information is relevant for Happy Hospital How ethics influence accounting decisions
Budget Performance Report
Budget performance report allows the organization to monitor actual revenues and expenses against the projection made in the budget. The organization need to know when revenue is low or expenses are high so that they may respond immediately to the problem. This instrument allows the organization to prepare the budget for the next year from the actual result.
A budget performance report would give Happy Hospital an actual picture of the low revenue and high expense situation they are currently facing. The financial manager and program manager can discuss any shortfalls or excess in revenue or expenses to determine what adjustment are need to make correction. Once the organization makes the corrections and the results are positive the process for next year budget can be made.
Ethics deals with the good, bad and the moral duty or obligation, In addition, ethics is a person??™s moral principle or value or a system of moral values. Ethics is the moral fiber of an individual, which assist with the decision making process or determining right from wrong.
In business, ethics acts as a principle or theory that helps to guide behavior in the business world. Accountings are faced with ethical choices when preparing financial reports, and these choices affect the consumer, wages, product, and services. Providing misleading information can have catastrophic effects at every level of an organization. That is why ethical behavior in business is critical.
In accounting it takes ethical principles from the top audit firm to make accounting principles meaningful. This is no coincidence that the large control frauds always use the top audit firms. They want that imprimatur; a clean audit opinion by a top audit firm provides respectability (Black, 2008).???
Relevant Reports for Decision – Making
Financial reports provides information that identifies the performance, activities, financial health, stability, and growth potential of the organization. The reports allow the organization to see current and prior financial status and to compare the data to help the organization make decisions. These report are decision making tool, will contain special purpose information, the reporting period will depend on the need, and be oriented toward future decisions.
The most relevant information for Happy Hospital to make decision about the projected spending for the new year are: The balance sheet that shows the assets and liability. The income statement shows a record of the income and expense of the organization. A cash flow statement that shows the sources and application of funds that includes operating, investment and financing activities and the direct impact on the organization cash position. These reports are additional to the budget performance report.
???The purpose of the conducting measurements and making evaluation is to provide answers to the following questions:
??? Why there are no excess funds available
??? Are the reporting entity financially sound
??? Would it be possible to make further loans
??? Will available cash generating be sufficient to provide in the anticipated demand (Marx, C. 2009)???
The use of performance budget report will provide Happy Hospital with actual information about the organizations financial well being. In addition, this tool will help aide in the decision – making for the upcoming year??™s budget. In addition, the importance of a ethical an accounting firm helps the general appearance to outsider who may have concerns about the organization.
Black, W.K., (2008). The link between moral and market values. Retrieve November 1, 2009 from http://www.scu.edu/ethics/publications/ethicalperspectives/accountingethics.html
Marx, C. (2009). Using financial statement for decision making. Retrieved November1, 2009 from http://ezinearticles.com/Using-Financial-Statements-For-Decision-Making&id=2318699