The nurse manager must acquire a wide range of cross-cutting skills. These include skills related to finance and accounting, as these will give her an insight into and understanding of the economic movements and needs of the health organization
Accounting is a science and a system that classifies and records all the financial movements of the company, in order to provide information on the financial transactions of the company, both capital inflows and outflows.
Accounting provides the deepest and most accurate information about the state of the organization, so that managers can make the most appropriate decisions at any given time and in any given situation.
Accounting has a fundamental equation that informs about these movements and helps to classify them, as well as to determine their direction:
Assets = liabilities + net worth
The assets consist of all the goods and rights that the company owns and which can be transformed into money or other equivalent means. We can divide assets into two main types:
Fixed assets. They are the «infrastructure» of the organization, that is, the assets that are not part of the activity of the company, although they are part of it. Fixed assets are tangible goods such as land, buildings, installations, machinery, furniture. All these make up the tangible assets. Fixed assets are also those that have no physical presence, such as research concessions, patents, goodwill, etc. that make up the intangible asset.
Current assets. These are all the assets that are expected to be used within a year. It forms part of the company’s activity. Current assets are those that indicate the ability to meet the payment obligations of the company, the ability to pay invoices.
Liabilities are all the debts and payment obligations that the organization has. Liabilities are the company’s current obligations arising from past activity.
Liabilities can be classified as follows:
Current liabilities. The debts of the company that must be paid in the space of time less than one year.
Long-term liabilities. These are the debts that must be paid in a period of more than one year.
We can also classify it as:
Unpaid liabilities or own funds. That is the company’s liabilities generated by the contribution of the partners and the profits or losses generated during a financial year. Equity is also called company’s net worth and represents the capital belonging to the owners of the organization.
Liabilities. These are the debts that the company acquires from suppliers. Liabilities can be divided in the same way as above, into long-term liabilities, which are due in more than one year. And, short term liabilities, which are due in less than one year.
The accounting has some basic principles that we must know, to understand the operation of the company as well as the present and future needs, which must be addressed to ensure the proper activity and sustainability of the organization.
The accounting principles are:
Principle of the company in operation. It explains that, unless there is evidence to the contrary, the management of the company will continue in the future.
Accrual principle. Transactions or economic acts are part of the accounting process at the time they occur, not at the time of payment or collection.
Uniformity principle. This principle refers to the fact that the accounting criteria cannot be simply modified, but rather the consequences and impact of this modification must be analysed.
Principle of prudence. All accounting events must be accounted for in a prudent manner, i.e. future profits must not be actually accounted for until they actually occur.
Principle of no netting. Revenue and expense items should not be offset.
Principle of materiality. Some principles may not be strictly applied if a significant impact on the true and fair view of the organization is not expected.