Respond to the post below by agreeing or disagreeing and state why. Be sure to add substantive detailed information in your posts when replying to your fellow classmates. Try to think about how you can enrich the class discussions and enhance the learning process by making other students critically think about the topic(s) being discussed when replying to your classmates’ posts Below is the questions is students are answering and use the source I’m providing only:
Epstein,L&Schneider,A.(2014). Accounting for Healthcare Professionals.Georgia Institute of Technology
Question 1: Explain how responsibility centers are used for the budgeting process
150 words 1. A responsibility center is a department within an organization that has an individual manager with authority and control over spending, earning, or investing (Epstein, L. & Schneider, A., 2014, Section 12.2). These controls include costs, profit center (revenues), and investment funds. A Responsibility center may be split into three different units. First is the cost center, which represents the facility department and the smallest unit of a healthcare organization usually only accountable for costs, but does not influence revenue or investment. Second, the profit center, this unit is in charge of generating revenue through product and cost for service provided. In every division of a profit center managers are responsible for sales and expenses. If a company executive team makes all of the investment decisions, the divisions are considered to be profit centers. Last is the investment center; in this unit, the manager is responsible for making investment decisions as well as costs and revenues. That group is responsible not only for profits but also for the return on funds invested. According to the American Academic & Scholarly Research Journal, “Managers of this department is responsible for all profit and can increase or limit the organizational activities” (Mojgan, S. 2012). Aime
150 words 2. Responsibility centers can be defined as “an organizational unit that has a specific manager with authority and control over spending, earning, or investing” (Epstein, L. & Schneider, A., 2014, Section 12.2). This means that each center has a manager in charge and its own set of policies, budgets and goals. Each center is responsible for its own expenses/revenues with the manager taking full responsibility of its results. In healthcare, each department can be classified as a responsibility center. You have the nursing department, housekeeping department and food service department, for example. They can be broken down into three categories. Cost centers include departments who solely incur costs such as the janitorial department. Profit centers are where profits are made/lost such as patient care areas or the production line. Investment centers oversee the development of new ideas, such as the research department in a hospital where new treatments are being created. Each manager utilizes responsibility accounting which can be defined as “the classification of financial and statistical data according to the organizational unit that produces the revenue and incurs the expense” (PublicHealthFinance.org, n.d).
Control reports are created regularly for each center for a certain time period. Roll up reporting combines the reports to each higher-level management for review. This allows them to see all responsibility center budgets on one page. Schone
Be sure to add substantive detailed information in your posts when replying to your fellow classmates. Try to think about how you can enrich the class discussions and enhance the learning process by making other students critically think about the topic(s) being discussed when replying to your classmates’ posts. Below is the questions is students are answering and use the source I’m providing only:
Epstein,L&Schneider,A.(2014). Accounting for Healthcare Professionals.Georgia Institute of Technology
Question 2: Compare strengths and weaknesses of capital investment evaluation methods.
150 words 1. Capital investment “is the acquisition of assets with an expected life greater than a year” (Epstein, Schneirder, 2014). The main methods of capital investment evaluation are discounted Cash Flows, Internal Rate of Return, and Net Present Value. When relating the strengths and weaknesses of these evaluation plans, many things must be acknowledged. Examples are inflation, discounts, facts, rates, cash flows, investment yields, and more since each evaluation practices various parts that are more or less important than others.
The initial internal rate of return is the discount rate that occurs in a net present value of zero for a string of projected capital movements. It is a cut off rate of return. It determines a break-even rate of return. One strength of this plan is that it produces an individual obstacle rate for investment resolution-making. It is a method supported by numerous accountants and financial services personnel. A flaw is that it is not simple to understand, not merely to calculate, and can generate misleading conclusions in respects to reinvestments.
Second, the Net present value is a technique used in capital budgeting to assessing expected results from very different projects. The total cost is compared with the anticipated savings and estimates the period in which the first investment will be returned. Here the total cost is compared with expected savings and estimates the period in which the first investment will be returned. The drawbacks signify all can’t accurately predict cash movements or decrease prices. Discounted cash flows depend on free cash flows, which kills guessing earnings. DCF, along with these evaluation methods, are highly susceptive to error and solely work adequately if there is correct data concerning projected cash flows. DCF systems are directed to three dangerous pitfalls, improper handling of inflation impacts, excessive risk adjustments, and failure to recognize how the administration can decrease project risk by diversification, and other acknowledgments to planned events. “According to the directives of the State Planning Commission on the determination of the economic efficiency of capital investment and new technology in the national economy of the CSSR, after May 10, 1961, each investment variant is supposed to be evaluated with respect to all the major connections of the process of reproduction, so that the budgetary calculations include all the substantial reductions in costs that the given solution creates for the national economy as a whole” (Jarkovsky, 1973). Vincent
150 words 2. There are three methods of capital investment evaluation. The first one is net present value in this method helps to get a projection of the revenue from an investment long term, the advantage to this method is that it will help to predict if an investment is worth it in the long run. The downside of this method is that it is very complex to use, and it is not 100% accurate because there is a lot of unknowns that can change the outcome, and the organization runs the risk of losing revenue and hurt the finances of the organization. The second method is the payback method; this method doesn’t take into consideration the amount of the investment, but the time that will take to get the financing back and start making a profit. An advantage to this method is that it is simple to use and has short term results, a disadvantage to this method is that it does not take in consideration future revenue pass the time frame that the investment is expected to return the revenue expected by the company. The third method is the internal rate of return in this method; they calculate the rate of revenue that an investment will give the company over the life of the investment. The pros of this method are that because of the way that the method works is the least likely to give the wrong rate and show witch is best to invest. The cons of this method are that it usually is not used in the long term more significant projects because the revenue is not enough to invest. Salinas
October 18th, 2019 
