HOSPITALS

Accounting for NPOs

 Hospitals
Hospitals provide for : depreciation,
care, and sick or injured
medical and surgical treatment
Rooms are provided meals are supplied.
Although major activities center about inpatients, hospitals frequently
render outpatient care and emergency services.
Hospitals may also carry on special activities: research
nurses training.
They also operate a number of auxiliary enterprises:
Pharmacies outpatients
Cafeterias staff members and visitors.
 Hospitals
Hospital operations call for important administrative activities.
hospital staffing;
registration of patients;
operation of the physical plant;
food, laundry and housekeeping management; and
budgeting, accounting, billing and collecting.
• The major source of hospital support is normally charges that are made to
patients for services. However, such charges frequently fail to cover the
full cost of hospital operations, and significant sums must be sought from
contributions and grants from private, public and charitable sources.
Funds For The Hospital
Hospitals VS. Educational Institutions
(SIMILARITIES)
HOSPITAL EDUCATIONAL
INSTITUTION
• acquires revenues that • acquires revenues that
must be applied to must be applied to
specific objectives specific objectives
• a fund approach is used • a fund approach is used
in the recognition of in the recognition of
resources resources
Hospitals VS. Educational Institutions
(DIFFERENCES)
HOSPITAL
• does not require variety of
funds
• with respect to the operating
summaries:
Revenues are to be
compared with expenses
A “full accrual basis” be
employed
Depreciation of hospital
properties be recognized in
arriving at total operating
costs
EDUCATIONAL
INSTITUTION
• requires variety of funds
• with respect to the operating
summaries:
Revenues were compared
with expenditures
A “modified accrual basis”
was employed
Depreciation of the
educational plant was
generally ignored
Four Major Fund Groupings
General or current fund

Temporary funds

Endowment funds

Plant funds
General or Current Fund
Four Major Fund Groupings
General or Current Fund
• Summarized the current resources that are to be used in
meeting the obligations arising from general operations.
• Resources that can be applied without restriction are
reported here.
• Expenditures for which specific funds have not been provided
are financed from these resources.
• The general fund of the hospital is the same in nature are
function as the general or current fund of the educational
institution.
Illustration:
1. Charges for services to patients for year ended December 31,
2018, P580,000 of which P45,000 is still due; adjustments and
allowances of P60,000 apply to charges.
Account Titles Debit Credit
Cash 475,000
Accounts receivable 45,000
Free service and adjustments- contractual patients 40,000
Free service and adjustments- general patients 16,500
Courtesy and miscellaneous allowances 3,500
Earnings from routine service- inpatients 320,000
Earnings from routine services- outpatients 50,000
Earnings from special services 210,000
Illustration:
2. Other hospital revenues, P420,000 of which P10,000 is still
due from temporary fund in reimbursement of research
expenses.
Account Titles Debit Credit
Cash 410,000
Due from temporary fund 10,000
General contributions, donations, legacies and
bequests 180,000
Grants from community chests, foundations 122,500
Donated services and commodities 10,000
Income transfers from temporary funds 57,500
Miscellaneous revenues 50,000
Illustration:
3. Collections of interest and dividends in endowment funds
securities, P85,000 of which P5,000 is due from Endowment Fund
#1 representing bond premium amortization

Account Titles Debit Credit

Cash 85,000
Due from Endowment Fund #1 5,000
Income from investments 80,000
Illustration:
4. Expenditures for hospital supplies. P200,000 of
which P25,000 has not been paid

Account Titles Debit Credit

Inventory of supplies 200,000
Cash 175,000
Vouchers payable 25,000
Illustration:
5. Hospital supplies charged put,
P170,000
Account Titles Debit Credit
Administrative and general 5,000
Household and property 10,000
Professional care of patients 15,000
Dietary 120,000
Outpatient and emergency 5,000
Other expenses 15,000
Inventory of supplies 170,000
Illustration:
6. Payment of hospital salaries and wages
P490,000
Account Titles Debit Credit
Administrative and general 85,000
Household and property 45,000
Professional care of patients 220,000
Dietary 60,000
Outpatient and emergency 30,000
Other expenses 50,000
Cash 490,000
Illustration:
7. Payment of hospital expenses other than salaries
and wages
Account Titles Debit Credit
Administrative and general 20,000
Household and property 10,000
Professional care of patients 25,000
Dietary 7,500
Outpatient and emergency 2,500
Other expenses 10,000
Cash 75,000
Illustration:
8. Payments of interest on mortgage, P60,000 and of
installment due on mortgage carried as liability in the
plant funds, P50,000

Account Titles Debit Credit

Interest expense 60,000
General fund balance 50,000
Cash 110,000
 9. Adjustments required on December 31, 2018: (a) allowance for
uncollectible accounts, P2,500; (b) accrued salaries and wages, P5,000;
(c) charges for depreciation on properties carried as assets by plant
funds, P85,000; (d) to recognize amount to be paid to plant funds
equal to depreciation on properties.
Account Titles Debit Credit
Bad debts 2,500
Allowance for uncollectible accounts 2,500

administrative and general 1,000

Household and property 250
Professional care of patients 1,250
Dietary 750
Outpatient and emergency 250
Other expenses 1,500
Cash 5,000

Depreciation 85,000
General/current fund balance 85,000

General/current fund balance 85,000

 10. To close general operating revenue and expense
accounts at the end of the period
Account Titles Debit Credit
Earn from routine service-inpatients 320,000
Earnings from routine services- outpatients 50,000
Earnings from special services 210,000
General/current fund balance 222,500

Free services and adjustments-contractual patients 40,000

Free service and adjustments- general patients 16,500
Courtesy and miscellaneous allowances 3,500
Bad debts 2,500
Administrative and general 111,000
Household and property 65,250
Professional care of patients 261,250
Dietary 188,250
Outpatient and emergency 37,750
Other expenses 76,500
 11. To close other revenue and expense accounts at
the end of the period
Account Titles Debit Credit
General contributions, donations, legacies and bequests 180,000
Grants from community chests, foundations 122,500
Donated services and commodities 10,000
Income transfers from temporary funds 57,500
Income from investments 80,000
Miscellaneous revenues 50,000
Interest expense 60,000
Depreciation 85,000
General/current fund balance 355,000
Temporary Funds
Four Major Fund Groupings
Temporary Funds
• composed of current sources that are available for
current purposes but are subject to limitations in
their use
• Resources from gifts and grants and Income from
endowment funds: research
medical libraries
nurses training
Illustration:
1. Receipt of cash gift to be used for medical research,
P10,000

Account Titles Debit Credit

Cash 100,000

Temporary Fund A balance 100,000

Illustration:
2. Purchase of securities, P85,000
Account Titles Debit Credit

Temporary Investment- Fund A 85,000

Cash 85,000
Illustration:
3. Receipt of cash gift to be used for books and
journals for hospital patients, P10,000

Account Titles Debit Credit

Cash 10,000

Temporary Fund B balance 10,000

Illustration:
4. Sale of securities, book value, P25,000, for
P23,500
Account Titles Debit Credit
Cash 23,500
Temporary Fund A balance 1,500
Temporary Investment Fund A 25,000
Illustration:
5. Collection of interest and dividends

Account Titles Debit Credit

Cash 5,000

Temporary Fund A balance 5,000

Illustration:
6. Expenditures during year by general fund for
research for research chargeable to Temporary Fund A,
P50,000; cash transferred to general fund, P40,000.
Account Titles Debit Credit

Temporary Fund A balance 50,000

Cash 40,000

Due to general fund 10,000

Illustration:
7. Payment of general fund for books and journals
chargeable to Temporary Fund B balance, P7,500
Account Titles Debit Credit

Temporary Fund B balance 7,500

Cash 7,500
Illustration:
8. Adjustments required on December 31, 2018;
accrued interest on securities, P250
Account Titles Debit Credit

Temporary Fund B balance 7,500

Cash 7,500
Endowment Funds
Four Major Fund Groupings
Endowment Funds
• Represent resources that have been transferred under conditions
that limit expenditures to the income that is produced by such
resources.
• Assets may be transferred directly to the hospital, or they may be
transferred to a trustee who administers them for the benefit of
the institution.
• An endowment may also be created by the action of the governing
board of the hospital.
• Terms of endowment may place no restrictions on the use of the
endowment income, or they may specify a particular purpose for
which the income is to be used.
• In the absence of restrictions, endowment income becomes
available to the general fund; when there are restrictions, income
is reported in a temporary fund.
Illustration:
1. Receipt of bonds in establishment of Endowment Fund #1
as follows: Co. R bonds, face value P500,000, market value
on date of transfer, P550,000. Co. S bonds face value,
P500,000, market value on date of transfer, P470,000
Account Titles Debit Credit

Investments in bonds at face value (Endowment Fund #1) 1,000,000

Investments-unamortized bond premium (Endowment
Fund #1) 50,000
Investments-unamortized bond discount (Endowment
Fund #1) 30,000

Endowment Fund #1 balance 1,020,000

Illustration:
2. Receipt of cash in establishment of Endowment Fund
#2, P250,000. Endowment income is to be used for
specified research projects.

Account Titles Debit Credit

Cash 250,000
Endowment Fund #1 balance 250,000
Illustration:
3. Purchase of 1,000 shares of Co. T preference
shares, P240,000

Account Titles Debit Credit

Investments in preference shares (Endowment Fund #2) 240,000

Cash 240,000
Illustration:
4. Collection of interest by general/current fund that
includes P5,000 reimbursable to Endowment Fund #1
for bond premium amortization.

Account Titles Debit Credit

Due from general/current fund 5,000

Investments- unamortized bond premium (Endowment
Fund #1) 5,000
Illustration:
5. Sale of Co. S bonds at face value,
P250,000
Account Titles Debit Credit
Cash 250,000
Investments-unamortized bond discount(Endowment
Fund #1) 15,000
Investments-at bonds at face value (Endowment Fund
#1) 250,000
Endowment Fund #1 balance 15,000
Plant Funds
Four Major Fund Groupings
Plant Funds
Resources: Physical resources
Cash and other assets

2 Plant fund balances: Investment in Plant

Reserve for Plant Improvement
and Expansion
Plant Funds
Transactions: Acquisition of land construction of
hospital financed by gifts of cash and
cash raised through a mortgage
Receipts of gifts of cash and securities
for plant improvement and replacement
Acquisition of equipment
Payment by general fund of mortgage
installment
Notre Dame De Chartres Hospital
Hospitals
 Privileged to share in
God's saving and healing
action, we envision NDCH VISION
as a Christ-centered,
dynamic and socially
responsible global health
care institution providing
holistic quality health
care services.
 Faithfully live and proclaim God's love
• Faithfully live and proclaim God's
love through compassionate care.
• Uphold bio-ethical principles and the
teachings of Catholic Church. MISSION
• Develop competencies of health care
professionals for integral growth and
strengthen partnerships in education,
training and research.
• Pursue value innovative and socially
responsive health care services at par with
global standards for sustainability
• Assure that Christian stewardship
and good governance are practiced.
1. Laboratory
Results SERVICES:
2. Imaging Results
3. Cardio Results
4. E-Doctor
• October 1, 1931 Notre Dame started when
the Sisters of Saint Paul converted their
summer house into 40 bed hospital
• World War II Notre Dame was not spared
from the horrors of war as it was bombed by
the Japanese soldier HISTORY
• October 7, 1946 Notre Dame rose from the
ravages of war thus; another 40 bed unit was
blessed and inaugurated
• April 19, 1959 Notre Dame de Lourdes
Hospital was rebuilt and blessed and became
a prominent institution in Baguio City
• July 16, 1990 The hospital was not spared
from the devastating earthquake that rocked
Baguio City
• March 1991 The hospital was
deemed unsafe and tents were built to
accommodate their patients which
resulted into closing the hospital
• October 1, 2003 The Sisters of
Saint Paul of Chartres came back to
HISTORY
fulfill their mission and they started as
Notre Dame De Chartres Diagnostic
and Pastoral Center (NDCDPC)
• August 22, 2005 NDCDPC
expanded their health care services and
after fulfilling recommendation and
accreditation. Notre Dame De Chartres
Hospital opened and started their 24-
hour hospital operation
Financial Statements
Hospitals
 Statement of Financial
Position
Financial Statements
 Statement of Comprehensive
Income
Financial Statements
Add a Slide Title - 3
 Statement of Cash Flows
Financial Statements
Statement of Changes in Fund
Balance
Financial Statements