Case study 5-1, pages 80-81 Introduction to health care finance and accounting Harrison & Harrison, 2013.

In this case, it shows how professional accountants should use their professional judgment when reporting accounting results. "Accounting is more an art than a science" Harrison & Harrison, 2013. P.80.

The U.S. GAAP standards in this image (and found in your book on page 80) were developed and codified by the Financial Accounting Standards Board (FASB) and accepted by the AICPA (American Institute of Certified Public Accountants). You have probably heard of the AMA (American Medical Association) for physicians. It is a professional organization that promotes and educates physicians. The professional organizations that developed GAAP (Generally Accepted Accounting Principles) are similar to the AMA in that they provide a similar role for accountants providing guidance for how GAAP accounting standards must be applied.

Read the assigned case and answer the following:

Which of the approaches, in this case, reflects more accurately the financial operations of the company during its first year of operation? What are the two accounting approaches offered? Do you think these two approaches are acceptable? Explain your reasons