Why is it important to establish a chart of accounts Provide

Why is it important to establish a chart of accounts? Provide at least three examples of accounts that may be present in a physician office setting, but not in a hospital setting. Explain why that would happen.

Solution

Chart of accounts is important in order to ensure that the person who is interested in knowing about the accounts of the company, is able to know about it by segretating the information. The chart of accounts will give information about revenue, expenditure, assets and liabilities. The examples of three accounts that may be present in a physician hospital setting are: costs incurred in setting up and running the clinic, expenditures and revenues earned by the clinic. The reason is that in case of hospital, the details of the accounts are given in the annual report or website of the hospital but it case of a physician\'s clinic, there is no such annual report. So the financial performance of the clinic is represented in the form of chart of accounts.