Balance Sheets Income Statements And Statements Of Cash Flow

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The State of Statements:

Balance Sheets, Income Statements
and Statements of Cash Flow
Robert M. Traynor, Ed.D., MBA
Audiology Associates, Inc.
Johnstown, Colorado
For most audiologists the patient is foremost in mind as we
provide hearing care services. Successful practitioners know that when their practice is centered on their patient’s welfare, success will usually follow. Probably the greatest responsibility of the

Robert G. Glaser, Ph.D.
Audiology Associates of Dayton, Inc
Dayton, Ohio

patient-centric practitioner is to be in business next year when the patient needs things that are warranty items, or other services that may be of benefit to them. There are many stories of highly sucContinued On Next Page FEEDBACK • VOLUME 19, NUMBER 3 • FALL 2008


Feature The State of Statements
cessful practices that did not survive for one
reason or another. These failures are most
commonly related to poor management
practices and less likely due to the quality
of the clinical care provided.
Historically, academic programs preparing audiologists for clinical work have either not addressed issues of managing a
practice as a business entity or have offered
limited information as a part of a course
rather than offering an entire course in
practice management. Contemporary programs are offering comprehensive courses in practice management, increasing the
likelihood for not only surviving the first
few years of practice but optimizing the
chances for success in the hard fought world
of today’s health care market place. When
entering independent, private practice,
audiologists must be well prepared to
address the multi-faceted challenge that is
practice management. They must have the
essential tools needed to monitor, manage
and maintain their business to profitability.
Thus,to be a good manager,clinicians must
have the capability to digest information
about the financial performance of the
practice and develop the background to
translate that information into decisions
that move the practice toward profitability.
Although it is not necessary to obtain an
MBA in order to know how to run your
practice or an audiology profit center within a hospital, educational, or other institutional setting, courses in business management, accounting and finance are
substantially beneficial and readily available
at most local community colleges. These
courses offer the practitioner greater insight
into the management of their practice and
gives them the power to interpret the relevant business variables. The following discussion is an attempt to orient clinicians to the basics of the Balance Sheet, Income
Statement and, probably most important,
the Statement of Cash Flows.
Financial Statements
Most of us use the services of an
accountant to prepare reports and to assist
us in the interpretation of the information
they contain. Traynor (2008) suggests that
practitioners should have knowledge of
the vocabulary and language of accounting
to effectively communicate with the


accounting (and bookkeeping) professionals who manage their practice and protect their assets. Although it is the bookkeeper or office manager in the practice that enters the day-to- day financial data, it is

the accountant who prepares financial
reports that will assist the practice owner
or manager in making evidence-based
decisions regarding the success or failure of
daily operations, a specific procedure, or a

new market offering. These reports are
fundamental to understanding the reasons
for positive or negative changes in the bottom-line performance of the practice. Such accounting reports are prepared
according to internationally accepted
accounting rules called the Generally
Accepted Accounting Principles (GAAP),
a universal method of valuing profit and
measuring assets and liabilities. Although...
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