MODULE 1

Module Introduction

Welcome to Module 1: Introduction. In this module, you will become familiar with the basic terminology
and principles used in bookkeeping in a medical office.

This module is divided into the following units:

Unit 1: Introduction to Bookkeeping

Bookkeeping is a vital skill for Medical Office Assistants (MOAs), ensuring that financial records are
accurate and organized. This unit introduces the fundamental concepts and practices of bookkeeping,
laying the foundation for effective financial management within a medical office setting.

This unit covers the following topics:

Introduction to Bookkeeping for MOAs

What Comes to Mind When You Think of Bookkeeping?

What Basic Terminology is Used in Bookkeeping?

Activity: Non-Graded Knowledge Check

Activity: Classifying Accounts

Case Study

Introduction to Bookkeeping for MOAs

What part does Bookkeeping play in the role of an MOA?

As an MOA, you will perform a variety of duties as part of your daily job. You may answer the phone,
schedule appointments, process mail, process insurance, write correspondence, and manage medical
files. You may also be responsible for the medical facility's bookkeeping, which includes accounts
payable, accounts receivable, and managing the general ledger.
The duties that you will be responsible for might be different from one medical office to another;
however, we want to equip you with all the skills that you might need to set you up for success.

During our Bookkeeping for MOAs course, you will be able to perform basic bookkeeping procedures,
understand basic bookkeeping terminology, and manage accounts receivable and accounts payable.

You will make journal entries and record transactions in the general ledger as well. You will also learn
basic information about calculating sales tax, managing cash information about calculating sales tax,
managing cash, reconciling banking, and managing purchasing and inventory.

Each subject is covered in a variety of ways to ensure you relate to the material, no matter your learning
style. Learn your way, on your schedule.

What Comes to Mind When You Think of Bookkeeping?

Bookkeeping is the act of recording and organizing all the financial transactions that occur during the
course of doing business. It primarily focuses on recording day-to-day financial transactions. As an MOA
you will be dealing with multiple financial transactions such as receiving cash, invoices, sales, and
purchase orders.

Activity: Non-Graded Knowledge Check

Activity: Classifying Accounts

Now that you know some of the basic terms and concepts used in bookkeeping, it is time to practice
classifying accounts.

Using the definitions explained earlier, complete the practice exercises presented below and check your
answers with those provided.

Exercise 1

Classify each of the following account names as an asset, liability, equity, revenue, or expense.

Dr. John Smith’s Clinic Case Study

In May 2021, Jennifer Turner accepted a job offer to work as an MOA at Dr. John Smith’s Clinic. Dr.
Smith is one of the best plastic surgeons in her hometown.

Jennifer is a new graduate of the Medical Office Administrator program. During her first week, Jennifer
is getting familiar with the new job.

Please describe what Jennifer would do to familiarize herself with her new role in the first few weeks.

Some things that Jennifer may familiarize herself within her new role in the first few weeks are:

Understanding and using the software system used at the clinic (accounting, administration, and so on)

Reviewing and familiarizing herself with the client’s records

Booking appoints for clients

Unit 1: Accounts Receivable and Payable

Accounts receivable and payable are critical for maintaining the financial health of a medical office. This
unit introduces key concepts such as payment terms, sales ledgers, and managing doubtful accounts.
Through activities and case studies, you will practise applying these concepts to real-world scenarios,
building essential skills for accurate financial management in a medical office setting.

This unit covers the following topics:

Activity: Mind Map

Accounts Receivable

Sales Ledger

Accounts Receivable Departments

Doubtful Accounts

Payment Terms

Accounts Payable

Terminology & Activity: Non-Graded Knowledge Check

Case Study

Import

Activity: Mind Map

In a medical office, what goods and services are sold?

Create a mind map with your thoughts. Write the words “goods and services sold” in the centre of the
mind map and write words that come to mind when you think about what goods and services are sold in
a medical office.

After you have thought about it, click the mind map example button below to see the mind map.
Sales Ledger

Use of a ledger

A sales ledger is a record of a company’s sales, showing amounts paid and owed by customers.

It records the money received for goods or services, plus what is still owed. This ledger entry records all
sales in the book of records, whether the payment is received or not yet received.

A sales ledger normally records:

The sales or service a business has made.

The amount of money received for goods or services.

The amount of money debtors owes at the end of each month.

Sales ledgers record sales and sales returns, which are negative entries.

The typical sales ledger format contains information like the date of sale, invoice number, amount of
sale, products sold, name of the customer, tax information, freight charges, and so on.
Advantages of sales ledger

There are several advantages of a sales ledger.

First, it helps businesses to keep detailed information regarding the sales made.

It also helps in backtracking in case of any issue that arises in the future, like sales return, and so on.

It helps keep the general ledger precise, since all the detailed information records are in the sales ledger.

It is the source for the sales amount recorded in the income statement.

At times of mismatch in the sales account, the ledger can be used to research and understand what
resulted in the mismatch.

Auditors can dig deep into the sales ledger to verify if the sales reported by the business are legitimate.

Disadvantages of sales ledger

The disadvantages of a sales ledger are listed below.

It can be time-consuming and requires effort, knowledge, and skills to maintain.

It records a transaction even before the payment is received; so, a pending payment is tracked until the
customer makes payment.

The sales account has cumulative information on the sales ledger, so it might not be worth the effort
unless something goes terribly wrong. In a smaller business it might not be worth the time.

Example of a ledger
Accounts Receivable Departments

Large companies may have accounts receivable teams or departments that receive funds on behalf of
the company and apply them to their current pending balances.

Collections and cashiering teams are part of the accounts receivable department.

The collection department seeks the debtor.

The cashiering team applies the money received to the correct accounts.

Types of receivables

Receivables can generally be classified as accounts receivable or notes receivable.

Accounts receivable are amounts that customers owe the company for normal credit purchases.

Notes receivable are amounts owed to the company by customers or others who have signed formal
promissory notes in acknowledgment of their debts.

Accounts receivable and notes receivable that result from company sales are called trade receivables.

Review these definitions:

Accounts receivable
Accounts receivable are amounts that customers owe the company for normal credit purchases. Since
accounts receivable are generally collected within two months of the sale, they are considered a current
asset. Accounts receivable usually appear on balance sheets below short-term investments and above
inventory.

Account receivables are classified as current assets assuming that they are due within one year.

Notes receivable

Notes receivable are amounts owed to the company by customers or others who have signed formal
promissory notes in acknowledgment of their debt.

Promissory notes strengthen a company's legal claim against those who fail to pay as promised. The
maturity date of a note determines whether it is placed with current assets or long-term assets on the
balance sheet.

Notes that are due in one year or less are considered current assets, while notes that are due in more
than one year are considered long-term assets.

Doubtful Accounts

Since not all customer debts will be collected, businesses usually estimate the amount of debt to be paid
and then record an allowance for doubtful accounts.

Not all debts will be collected; therefore, a business usually estimates a part of their debt will not be
collectable and records a matching amount as an allowance for doubtful accounts.

Allowance for doubtful accounts

Two methods are available to calculate the amount of bad debt expense and allowance of doubtful
accounts at the end of an accounting period — percentage of accounts receivable or percentage of
sales.

When accounts receivable are not paid, some companies turn them over to third party collection
agencies or collection attorneys who will attempt to recover the debt by negotiating payment plans,
settlement offers, or pursuing other legal action.
Payment Terms

Payment terms are forms of trade credit, which specify the total outstanding on the invoice that is
expected to be received in full 10, 15, 30, or 60 days after the goods or service are delivered to the
client.

Net 30 or Net 60 terms are often coupled with credit for early payment.

Common payment terms

An example of a common payment term is Net 30, which means that payment is due at the end of 30
days from the date of invoice.

The debtor is free to pay before the due date; businesses can offer a discount for early payment.

Other common payment terms include Net 45, Net 60, and 30 days end of the month.

See the following example.

A Naturopath clinic sold $200 worth of supplements to Michael. The clinic offers credit terms net 30, so
Michael is required to pay the amount owed ($200) within 30 days from the date of issuing the invoice.

Michael can choose to pay the amount earlier if he wants or in 2 installments. However, the full amount
should be paid by the end of the 30 days.

Managing Outstanding Accounts Receivable

Receivables of all types are normally reported at their net realizable value, which is the amount the
company expects to receive in cash.

Managing outstanding accounts receivable tips

Now that you have a better understanding of accounts receivable, please click the start button below to
view some tips for managing outstanding accounts receivable.

Accounts Payable
If people owe you money for goods and services, it is called accounts receivable. When your business
owes others money, it is called accounts payable.

What are accounts payable?

The amount you owe for services bought on credit.

All businesses consume services such as electricity, telephone, broadband, and cable.

This means that the vendor supplied you with some service and sends a bill that needs to be paid by a
certain date or else you will default.

The bills get generated towards the end of the month or a particular billing period.

The amount you owe becomes accounts payable.

It is considered a current liability.

Click on the below tabs to see the two examples.

Example 1

Example 2

Example 1

There are two companies. Company A and Company B. Company A purchases goods from Company B on
credit.

The amount Company A purchased needs to be paid back in 30 days.

Company A will record the purchase as accounts payable, while Company B will record the same sale as
accounts receivable.

This is because your company (Company A) must pay Company B.

Role of accounts payable

In smaller businesses, accounts payable and receivable tasks are usually combined. In large companies,
accounts payable departments may be responsible for more than just paying incoming bills and invoices.

Here is an example:
For businesses that require staff to travel, an accounts payable group may manage travel expenses.

The travel management by the accounts payable department might include making advance airline, car
rental, and hotel reservations.

Depending on the controls of a company, accounts payable might process requests and distribute funds
to cover travel expenses.

After business travel has occurred, accounts payable would settle funds distributed versus funds actually
spent, or process travel reimbursement requests.

As an MOA, you might be in a position to manage travel expenses that occur due to attending medical
conferences or any related business trips.

Reimbursement/internal payments

In some businesses, accounts payable is also responsible for distributing internal reimbursement
payments, as well as managing and administering petty cash.

In businesses that operate like this, employees must complete a log report, provide receipts, or do both
as a backup for reimbursement requests.

Small expenses such as miscellaneous postage, out-of-pocket office supplies, or company meeting lunch
are handled as petty cash.

Vendor

The vendor is the company or person who sold the goods or services to your business.

Vendor payments

ccounts payable organizes and maintains vendor contact information and payment terms.

Depending on the internal controls of a company, an accounts payable department might handle pre-
approved purchase orders or may verify purchases after a purchase is made.
The accounts payable department also handles end-of-month aging analysis reports that let
management know how much the business currently owes.

What is the accounts payable process?

When managing accounts payable you will have a set of procedures to follow before making a vendor
payment.

Set guidelines are essential because of the value and volume of transactions during any period of time.

The process involves the following four steps:

Receiving the bill

Review bill details

Updating records once the bill is complete

Making timely payment

If goods were purchased, the bill helps trace the quantity of what was received. The validity of the bill
can be known during this time, too.

Why do you need internal controls?

To make sure a company’s cash and assets are safe, the accounts payable process should have internal
controls to:

Prevent paying a fraudulent invoice

Prevent paying an inaccurate invoice

Prevent paying a vendor invoice twice

Be certain that all vendor invoices are accounted for

Case Study
Discussion Board 2

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Now that you have learned about managing accounts receivable and payable, post your answer to the
following in Discussion Board 2.

As a Medical Office Administrator, you might be in charge of managing the accounts receivable and
payable of your medical clinic. What approach you will take to make sure that you stay on top of this
task?

Dr. John Smith’s Clinic Case Study

In the previous module, you were introduced to Jennifer. She is a recent graduate and has just started
working at Dr. John Smith’s Clinic. The following is the second part of this case study.

Some of the services that Dr. Smith offers are not covered under the provincial health system. Mrs.
Johnston had some cosmetic work done that is not covered by the provincial health system or her
personal health insurance. Jennifer had to issue an invoice to Mrs. Johnston.

The invoice #20 was issued on April 1, for $3500 to Mrs. Johnston with a net 30 days term.

What are the items Jennifer needs to complete regarding this transaction?
MODULE 3

Unit 1: The Ledger

The ledger is a cornerstone of financial management in bookkeeping. In this unit, you will explore the
general ledger, the accounting equation, and the double-entry system of bookkeeping. You will learn
how to analyze and record transactions using the general journal and ledger and understand how these
processes contribute to creating a trial balance. With activities and case studies, you will develop
practical skills and reinforce your understanding of key bookkeeping concepts.

This unit covers the following topics:

Accounting Equation

Double-Entry System of Bookkeeping

General Journal

The Ledger

Trial Balance

Terminology

Activity: Matching

Case Study

Accounting Equation

What is the accounting equation?

The accounting equation is a way to express the concept of ‘balancing the books’. Balancing the books
means maintaining equality in the books.

The accounting equation is:

ASSETS = LIABILITIES + EQUITY (or Capital)

It means that the total of your assets (items of value) are equal to the combined total of your liabilities
(debts) plus your equity (net worth).
ITEMS OF VALUE = DEBTS + NET WORTH

The accounting equation shows that a company's total assets are equal to the sum of its liabilities and
shareholders' equity. Assets represent the company's valuable resources. Liabilities represent their
obligations. Shareholders' equity represents the amount of money that shareholders would receive if all
the company's assets were liquidated and all debts were paid off.

Readings

Read page 14 and complete Practice Exercise 1 on page 15 of Chapter 2 of the Basic Bookkeeping
Textbook.

Click Here

Working with debits and credits

Balance sheet

The balance sheet is a formal representation of the accounting equation. Total assets must always equal
the sum of liabilities and equity.

Basic rules of debits and credits

When we record a financial transaction, we have to record them in at least 2 accounts: where the debit
column is on the left and the credit column is on the right. Whenever an accounting transaction is
created, the total of the debits and credits must always equal each other, so that the accounting
transaction is balanced. If a transaction is not balanced, then it is not possible to create a balance sheet.
This is the reason why we use the debits and credits in a two-column transaction recording format to
maintain accuracy.

Double-Entry System of Bookkeeping

What is the Double-Entry System of Bookkeeping?

In the double-entry system, financial transactions are recorded as debits and credits. Since a debit in one
account offsets a credit in another, the sum of all debits must equal the sum of all credits. The
main purpose of a double-entry bookkeeping system is to maintain the balance in the company’s
accounts and to project an accurate picture of the company's current financial position.

Analyzing transactions
To analyze a transaction to ensure it is recorded correctly, answer the following questions[1]:

What did we get and what did we give through this transaction?

What account is used for the item received and for the item given?

What kind of account is it?

Will the account increase or decrease because of this transaction?

Will the account be debited or credited? How much?

Is the entry balanced?

General Journal

Now that you have a solid understanding of the accounting equation, debits, and credits, and analyze a
transaction, it is time to take a look at the general journal.

Definition

The general journal is a basic journal consisting of only two money columns: one for debit entries and
one for credit entrie

Example - Tammy Parker’s Medical Clinic

Here is an example of a series of transactions that will be recorded in the general journal at Tammy
Parker’s medical clinic.

On April 1, 2021, Tammy Parker opened a medical centre.

Record the transactions for her business in a General Journal.

Provide a suitable explanation for each transaction.

2021

Apr 2 Bought medical supplies from Grande Wholesalers Ltd., $353. Issued Cheque #1.
Apr 2 Paid the clinic rent for April. Issued Cheque #2 for $800.

Apr 4 Sold some supplements and vitamins to A. Hanana on 10-day terms, $228.50; Sales Invoice #1.

Apr 7 Bought medical equipment from Pharmacare on 10-day terms, $1,700; Purchase Invoice #342.

Apr 9 Cash sales for this week, $1,185.30.

Apr 12 Sold merchandise on 30-day terms to James Korol, $118.10, Sales Invoice #2; Jack Abbot,
$123.60, Sales Invoice #3; and Jon Wilde, $160, Sales Invoice #4. (Record this as a compound entry.)

Apr 14 Received a cheque from A. Hanana for the amount owing on Sales Invoice #1, $228.50.

Apr 16 Cash sales for the week, $496.90.

Apr 17 Issued Cheque #3 to Pharmacare in full payment of account (see the April 7 entry).

Apr 23 Cash sales for the week, $623.80. 30 Issued Cheque #4 to City Hydro to pay the electricity bill,
$117.60. (Utilities Expense)

Apr 30 Cash sales for the week, $334.65.

Date

Account / Description

Debit

Credit
Apr 2

Purchases

353.00

Bank

353.00

Bought mdse from Grande

Wholesalers Ltd.; cheque #1.

Rent Expense

800.00

Bank

800.00
April rent; cheque #2.

A/R A. Hanana

228.50

Sales

228.50

Sold mdse on terms 10 days:

Purchases

1,700.00

A/P Pharmacare
 1,700.00

Bought mdse on invoice #342;

due in 10 days.
9

Bank

1,185.30

Sales

1,185.30

Cash sales for the week.

12

A/R James Korol

A/R Jack Abbot

123.60

A/R Jon Wilde

160.00

Sales

401.70
Sold mdse on invoices 2, 3, 4;

due in 30 days.

14

Bank

228.50
 A/R A. Hanana

228.50

Rec’d payment on invoice 1.

16
Bank

496.90

Sales

496.90

Cash sales for the week.

A/P Weston Grocers

1,700.00

Bank

1,700.00

Paid invoice 342; cheque #3.

Bank

623.80

Sales

623.80

Cash sales for the week.

Utilities Expense

117.60

Bank

117.60

Paid City Hydro; cheque #4.

Bank

334.65

Sales

334.65

Cash sales for the week.

Definition

The general ledger is a master accounting document. It holds all the individual ledger accounts in one
place providing a complete record of all the financial transactions of your business. It helps you look at
the bigger picture. Accounts include assets (fixed and current), liabilities, revenues, expenses, gains, and
losses.

To get a better understanding of what the ledger is and why it is important go through the below
textbook readings.

Posting

Posting involves copying the debit and credit account balances from each journal to the corresponding
ledgers. We use these ledgers to create the income statement and balance sheet.

Balances in subledgers and the general journal are shifted into the general ledger. Posting only transfers
the total balance in a subledger into the general ledger, not the individual transactions in the subledger.

Subledgers are only used when there is a large volume of transaction activity in a certain accounting
area, such as inventory, accounts payable, or sales. Thus, posting only applies to these larger-volume
situations. For low-volume transaction situations, entries are made directly into the general ledger, so
there are no subledgers and therefore no need for posting.

Readings

Trial Balance

After all entries in the journal have been posted to the ledger accounts, a trial balance is prepared.

A trial balance is a sheet recording all the ledger accounts and their balances, categorized into debit and
credit. The trial balance should be balanced if there were no errors in the posting from the journal to the
ledger.
Discussion Board 3

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Now that you have learned about some of the basics of the ledger, post your answer to the following in
Discussion Board 3.
Explain how you would analyze a transaction as an MOA

Unit 1: Petty Cash

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Petty cash is used to manage small, routine expenses within a medical office efficiently. In this unit, you
will learn how to handle petty cash, record transactions, and maintain accurate documentation using a
petty cash sheet. You will also explore the concept of a float and key terminology to ensure proper cash
management.

This unit covers the following topics:

Petty Cash

Petty Cash Sheet

Recording Petty Cash Entries

What is a Float?

Terminology

Case Study

Important

Please note that you are required to complete Quiz 4 at the end of Module 4.

Please note that you are required to participate in Discussion Board 4 at the end of Module 4.

Please note that you are required to complete Assignment 1: Cash Sheet and Cash Voucher in Module 4.

Please note that you are required to complete the Mid-Term exam at the end of Module 4.

Petty Cash

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What is Petty Cash?

Petty cash or a petty cash fund is a small amount of cash kept on hand, in a locked drawer or box, to pay
for minor expenses, such as office supplies or reimbursements. It is available for paying small expenses
without writing a cheque. The fund is balanced and reimbursed periodically. The amount of petty cash
will vary by company and may be in the range of $100 to $500.
Petty cash is also the name of the current asset account in the general ledger that is used to report the
amount in the company’s petty cash.

Click on the tabs below to learn about the examples, advantages, and disadvantages of petty cash.

Examples

Advantages

Disadvantages

What are some examples of when petty cash would be used?

Paying the mail carrier 90 cents for the postage due on a letter.

Reimbursing an employee $9 for supplies purchased.

Reimbursing an employee for purchasing $14 of bakery goods for an early morning meeting.

Petty Cash Fund

Amount in Petty Cash Fund

The amount in the petty cash fund is dependent on the anticipated need for cash to pay for small
expenditures over a specific period, generally one month. Most times, the amount in the petty cash fund
is between $100 and $500.

Operationally, petty cash funds have to be kept separate from all other types of cash received —for
example, payments (cash or cheques) received from clients to pay outstanding invoices. These payments
cannot be added to or be a part of the petty cash fund.

Establishing Petty Cash Fund

To establish or set up a petty cash fund, the employee who manages the account can cash a company
cheque on behalf of the fund. For safekeeping, the employee should place the cash in a cash box or a
cash drawer.

It is the responsibility of the employee who manages the petty cash to ensure that the fund is only used
for its intended purpose.

Petty Cash Voucher

Once petty cash has been established, a petty cash voucher is used to take money from the fund.
Petty Cash Voucher Information

Sample Petty Cash Voucher

The petty cash voucher contains information about:

The amount of the expenditure.

The date of the payment.

The name of the person or company to whom the cash was paid.

The purpose of the expenditure.

The account to be debited.

All necessary signatures (including the person who received the cash and the person who approved the
payment of the expenditure).

Readings

Review figure 9.1 on page 145 of Chapter 9 of the Basic Bookkeeping textbook to see a sample of a Petty
Cash Voucher.

Advantages of petty cash

Quick and convenient.

Easy to understand and use.

Disadvantages of petty cash

Vulnerability to theft and misuse.

The need to monitor and balance them periodically.

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What is a Petty Cash Sheet?

A petty cash sheet is a summary of expenditures from the petty cash fund. When the petty cash fund is
almost depleted, the petty cash sheet is created from the petty cash vouchers.

This summary can be in different forms such as a preprinted form like a journal, or it can be in the form
of a list of expenditures on a sheet of paper.

How to handle Petty Cash Sheet?

The following is how to handle the petty cash sheet.

You can treat it like a journal. This way, the sum of each column is posted to debit the appropriate asset
or expense account.

The petty cash sheet should be treated as a summary sheet. From this summary sheet, the expenditures
are transferred to the cash payments journal. Once this is done, a cheque should be issued to reimburse
the fund.
The last step is to post the amount to the debit column of the respective accounts from the cash
payments journal.

Readings

Refer to figure 9.5 - Petty Cash Sheet on pages 147-148 of Chapter 9 of the Basic Bookkeeping textbook.

Click Here

Sample Petty Cash Sheet

Click the button below to see a sample petty cash sheet[1].

Click to Reveal

Practice Exercises

To practice entering payments on a petty cash sheet, try the following exercises.

Exercise 1

Wigorn Clinic has a petty cash fund of $150. The following items were paid from this fund during August.

Enter these payments on a petty cash sheet, beginning with Voucher #44.

Add 13% HST.

Aug 6: Broom for the clinic, $12.08 Aug 8: Coffee and creamer for the staff, $16.25 (tax-exempt) Aug 9:
Delivery of special order of office supplies, $7.88 Aug 12: Pens for office, $7.35 Aug 14: Special order of
face masks, $23.52 Aug 15: Delivery of sale brochures, $22.89 Aug 16: Hand Sanitizers, $6.09 Aug 20:
Donation to charity, $20 (tax-exempt) Aug 22: Pens and pencils for office, $6.51 Aug 24: Postage, $6.62

Total the petty cash sheet and prove equal debits and credits. Calculate the cash on hand.

Prepare a General Journal entry to establish the fund on August 1.

Exercise 2

Massage Enthusiast office has a petty cash fund of $400. The following items were paid from this fund
during June.

Enter these payments on a petty cash sheet, beginning with Voucher #20.

No taxes calculated.

Hand Sanitizers, $45.

Coffee and creamer for the staff room, $22.5 (tax-exempt)

Delivery of special order of office supplies, $25.00

Pens for office, $8.00

Special order of merchandise, $86.50

Delivery of sale brochures, $35.00

Masks and gloves, $95.50

Donation to charity, $25 (tax-exempt)

Pens and pencils for office, $6.50

Postage, $6.00

Total the petty cash sheet and prove equal debits and credits. Calculate the cash on hand.

Prepare a General Journal entry to establish the fund on June 1.

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Recording Petty Cash Entries

Recording Petty Cash Entries

To explain how the petty cash system functions, we can assume that a petty cash fund was established
on October 1 by debiting $100 to the petty cash account.

The below record shows a general journal entry for establishing the fund and the corresponding entry in
the cash payments journal.

The examples that follow show:

A General Journal entry to establish the fund

The same entry on Oct.1 as it would be recorded in the Cash Payments Journal

Establishing the Petty Cash Fund (General Journal)

To illustrate how the petty cash system works, let us assume that a petty cash fund was established on
October 1 by debiting $100 to the petty cash account[1].
Click the button below to see a General Journal entry to establish the fund.

Click to Reveal

Fullscreen

zoom_out_map

Image of a financial ledger entry showing the date as October 1, with details for a petty cash transaction.
The entry includes 'Petty Cash' and 'Bank' accounts, along with a note: 'Issued cheque to establish petty
cash fund.' Amounts are recorded in the corresponding debit and credit columns.

Establishing the Petty Cash Fund (Cash Payments Journal)

Click the button below to see the same entry on October 1 as it would be recorded in the Cash Payments
Journal.

Click to Reveal

Reimbursing Petty Cash

Most businesses choose to reimburse petty cash funds at the end of the month to capture the expenses
incurred in that month. This is considered common practice; however, the reimbursement of the funds
can be made at any time.

Readings

For further information read pages 148 and 149 of Chapter 9 of the Basic Bookkeeping textbook and
check out figures 9.6 and 9.7.

Click Here

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What is a Float?

A float is the amount of cash that is in the cash drawer at the beginning of each day.

This balance usually consists of small bills and might vary based on the size of the business; however, it
is usually between $50 and $300.

At the end of each day we can calculate the total cash received during the day as follows:

cash in drawer – float = cash received in the day.

cash box

accounting journal

Cash Over or Short

Most times the cash in the drawer minus the float equals the cash received; however, sometimes that is
not the case.

When the amounts do not match, the difference is recorded in an account called cash over or cash
short.

Readings

Read pages 149 – 151 from Chapter 9 of the Bookkeeping Basics textbook. Pay particular attention to
figure 9.8.

Click Here

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Terminology

Some of the most often used terms related to petty cash are mentioned below. By clicking on the flip
cards below, you may learn more about each of the terms.

Petty Cash

Petty Cash:

An amount (often $100 to $500) based on the anticipated need to pay for small expenditures over a
given period of time.

Establishing Petty Cash

Establishing Petty Cash:

A cheque is issued and charged to an account called Petty Cash.

Petty Cash Sheet

Petty Cash Sheet:

When the Petty Cash Fund is nearly used up, a summary of the expenditures is prepared from the Petty
Cash Vouchers.

Petty Cash Entries

Petty Cash Entries:

The way Petty Cash expenditures are recorded on a Petty Cash Sheet. Each entry should include the
date, explanation, voucher number, full amount of the disbursement, HST, and the value of the item.

Reimbursing Petty Cash

Reimbursing Petty Cash:

Cash Over and Short

Cash Over and Short:

An expense account in the General Ledger that is used to report overages and shortages to an account
such as Petty Cash. The Cash Over and Short account is used to record the difference between the
expected cash balance and the actual cash balance in the account.

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Materials and Resources

Textbook:

Basic Bookkeeping, An Office Simulation, Brooke C.W. Barker, 8th Edition © Nelson Thomson Learning

Procedures for the Medical Administrative Assistant — Chapter 8

Assignment Description

Marie is the new MOA in Dr. Johnston’s clinic. As her first task, Marie is assigned to manage the petty
cash. The petty cash drawer has 6 receipts and a balance of $64.28.

Marie knew that at the beginning of the month the established fund was $250.
Below are the 6 receipts.

Coffee and creamer for $28.25 receipt dated Sep 6

Breakfast for the Dr. for $20.34 receipt dated Sep 8

Stamps for $33.90 receipt dated Sep 9

Garbage bags and dish soap for $8.31 receipt dated Sep 12

Lunch for the Dr. for $29.38 receipt dated Sep 14

Hand sanitizer for $65.54 receipt dated Sep 16

Marie is located in Ontario, and all receipts include 13% HST.

Assignment Steps

Record each invoice in a cash voucher, and then on the cash sheet to confirm that the balance is correct.

Unit 1: Bank Reconciliation

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Bank reconciliation is a critical process in ensuring accurate financial records and identifying
discrepancies between the medical office's books and bank statements. In this unit, you will learn the
steps involved in performing bank reconciliations and explore key concepts such as outstanding
transactions, common errors, and the reconciliation process.

This unit covers the following topics:

Bookkeeping Reconciliation

Terminology

Errors in Bank Reconciliation

Outstanding Transactions

Bank Reconciliation Process

Practice Exercises

Case Study
Important

Please note that you are required to complete Quiz 5 at the end of Module 5.

Please note that you are required to participate in Discussion Board 5 at the end of Module 5.

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What comes to mind when you think of the word reconciliation?

Create a mind map with your thoughts. Write the word “reconciliation” in the centre of your mind map
and write down words that come to mind when you think about it.

After you have thought about it, click the mind map example button below to see the mind map for
reconciliation.

Mind Map Example

Reconciliation

Reconciliation in bookkeeping is the process of comparing two different sets of records to ensure that
figures from both sources are the same.

What is Bank Reconciliation?

Bank reconciliation is the process of accounting for the differences between the existing journal entries
and those that appear on the bank statement and determining the correct bank balance.
Readings

Read through pages 154 - 157 of Chapter 9 of the Basic Bookkeeping textbook and make notes on the
bank reconciliation process and the terminology you come across.

Click Here

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Terminology

Some of the most commonly used terms related to bank reconciliation are mentioned below. By clicking
on the flip cards below, you may learn more about each of the terms.

Cancelled Cheques

Cancelled Cheques:

Cancelled cheques are cheques issued by the company and cashed by the bank. The bank charges back
the company’s bank account and returns the cancelled cheques (or a copy of them) to the company
each month with the monthly statement.

Outstanding Cheques

Outstanding Cheques:

An outstanding cheque is a cheque that has been issued by the company but has not been cashed by the
recipient. These cheques have not been cleared by the bank yet.
Certified Cheques

Certified Cheques:

A form of a cheque for which the bank verifies and guarantees that sufficient funds exist in the account
to cover the amount of the cheque. The bank will certify the cheque once the funds are verified. Those
funds are then set aside until the cheque is cashed or returned by the payee.

NSF (Non-Sufficient Funds) Cheques

NSF (Non-Sufficient Funds) Cheques:

Non-Sufficient Funds cheques are cheques returned to the issuer as the issuer did not have enough
funds in their bank account to cover the amount of the cheque. The bank charges a fee for NSF cheques.

Credit Memos

Credit Memos:

Credit memos are communications sent by the bank to notify their clients of transactions that have
increased the balance of the bank account.

Debit Memos

Debit Memos:

Debit memos are communications sent by the bank to notify their clients of transactions that have
decreased the balance of the bank account.

Bank Charges

Bank Charges:

Bank charges or bank fees are any charges imposed by your bank. These charges may include fees for
setting up new accounts, maintenance, and transactional services. These fees may be one-time fees or
charged on an ongoing basis.

Outstanding Deposits

Outstanding Deposits:

Amounts recorded in the journal on the last day or two of a month but not actually deposited at the
bank until the first few days of the next month.
Bank Statement

Bank Statement:

A record provided by the bank of the company’s banking transactions during the month. The statement
lists all the cheques issued, deposits made, and all pre-authorized debits and credits.

Cash Payments Journal

Cash Payments Journal:

A journal designed specifically to record all cash payment transactions.

Cash Receipts Journal

Cash Receipts Journal:

A journal designed specifically to record receipts of cash and cheques.

Back

NextErrors in Bank Reconciliation

Now that you know something about the process of bank reconciliation and the terms used, it is time to
look at where the errors come from.

Errors

Errors that the bank makes, and errors made in the company’s books can result in the two sets of
records being out of sync. Click on the tabs below to learn more about the errors.
Bank Errors

Cash Book Errors

Bank errors are usually very uncommon, but they still do happen. They are the result of incorrect
transactions on the part of the bank.

Bookkeepers often make errors in company records. Human errors are more likely to happen if
bookkeepers are using a manual process for bookkeeping.

For example, an error can occur when the amount of a cheque is entered incorrectly in the cash
payment journal. Such errors may be:

Transposed figures ($59 entered as $95)

Misplacement of the decimal point ($120. entered as $1.20)

Typing errors ($500 entered instead of $500.56)

These errors will be discovered when we compare the bank statement against the cash payments
journal entries.

Readings

Read the entry on Bank Errors on page 157 of Chapter 9 of the Basic Bookkeeping textbook.

Outstanding Transactions

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Transactions showing in the company journals but not processed by the bank usually include:

Outstanding cheques - cheques that have been issued but have not yet been cashed.

Outstanding deposits - amounts recorded in the journal on the last day or two of a month but not
actually deposited at the bank until the first few days of the next month.

On the other hand, some transactions might appear in the bank statement before they have been
recorded in the company’s journals.

These include:

Bank service charges

Customers’ NSF cheques

Bookkeepers need to perform regular bank reconciliations to catch any outstanding transactions, errors
made by the bank, or any bookkeeping errors.

Bank Reconciliation Process

Bank reconciliation is the process of accounting for the differences between the existing journal entries
and those that appear on the bank statement, and of determining the correct bank balance.

To achieve a balance between the two sets of records you need to complete a bank reconciliation.

Seven Basic Steps in Reconciling The Bank Account

There are seven basic steps in reconciling the bank account. These steps are usually performed by the
accountant. Hover over the buttons to learn more.
Unit 1: Sales Tax

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Understanding sales tax is essential for managing financial transactions in a medical office. In this unit,
you will learn about sales tax in Canada, how to calculate and remit PST, and how to register for
GST/HST. Through practical examples, you will develop the skills needed to handle sales tax accurately in
a professional setting.

This unit covers the following topics:

Sales Tax in Canada

How Do You Remit PST?

Calculating the Tax Included

Registering GST/HST

Case Study

Important

Please note that you are required to complete Quiz 6 at the end of Module 6.

Please note that you are required to participate in Discussion Board 6 at the end of Module 6.

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Sales Tax in Canada

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Sales Tax in Canada

Click on the buttons below for a description of the three types of sales taxes in Canada.
Practice Exercise

Now that you have a better understanding of Provincial Sales Tax (PST), complete practice exercise 7 on
page 62 of Chapter 4 of the Basic Bookkeeping textbook.
Click the button below to see the answer. How Do You Remit PST?

Each province has its own rules when it comes to PST. The tax has to be collected and remitted
according to the rules of each province. In Manitoba, for example, the PST must be remitted within 20
days of the end of the sales period for which the tax was collected. The reporting period may be annual,
quarterly, or monthly, depending on the amount of tax charged to customers.

As a reward for collecting and remitting the tax, the provincial government may allow the business to
keep a small portion of the tax, sometimes referred to as a “commission.” How much can be kept, if any,
will vary from province to province, as do the rules and exceptions for charging, collecting, and remitting
PST.

In Manitoba, for example, the commission is equal to 15% of the first $200 of tax collectible, and 1% of
the remaining tax collectible, to a maximum of $58 per month.

Readings

Practice exercise 11 on page 66 of Chapter 4 of the Basic Bookkeeping textbook.

Click Here

Practice Exercise

Calculate the amount of tax that a company can keep each month when remitting provincial sales tax.
Assume that the commission is equal to 15% of the first $200 of tax and 1% of the remaining tax, to a
maximum of $58 per month.

Fullscreen

zoom_out_map

Table showing monthly PST amounts, commissions, and remittances. The months listed are January
(PST: $248.50), February (PST: $119.95), March (PST: $485.00), and April (PST: $3,625.00). Columns
include Month, PST, Comm., and Remit.
Click to Reveal

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Click to Reveal

Tax Rate for Provinces

As mentioned above, in Canada we have three different types of sales taxes: PST, GST, and HST. Below is
an overview of the different sales tax percentages for each province and territory:

Province GST/HST PST Total

Alberta 5% GST n/a 5%

Manitoba 5% GST 7% 12%

New Brunswick 15% GST n/a 15%

Newfoundland and Labrador 15% GST n/a 15%

Nova Scotia 15% GST n/a 15%

Northwest Territories 5% GST n/a 5%

Nunavut 5% GST n/a 5%

Ontario 13% HST n/a 13%

Prince Edward Island 15% HST n/a 15%

Quebec 5% GST 9.975% 14.975%

Saskatchewan 5% GST 6% 11%

Yukon Territory 5% GST n/a 5%

Practice Exercise

Complete the following table of assets and expenses purchased during the month of February. This
medical office business operates in British Columbia, so these items are taxed at the rates in British
Columbia.

Fullscreen

zoom_out_map

Table showing items with their values, GST, PST, and totals. Items include office supplies ($87.00),
equipment ($630.00), masks and gloves ($888.00), medical supplies ($895.00), and desk, chair ($550.00).
Columns include Item, Value, GST, PST, and Total.

Click to Reveal

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NextRegistering GST/HST

Registering GST/HST

All businesses selling goods or providing services including medical services must register with the CRA.
The only exception is if the business has annual sales of $30,000 or less. There are several ways to
register your business with the CRA. Registration can be completed in one of the following ways:

By phone

Mail

Fax

Online

Once the registration has been completed and the CRA has assigned a business number to the
application, the business number must be shown in all sales invoices and sales receipts.

woman typing

writing note

Filing the GST/HST Return

All businesses are required to file a GST/HST return; the frequency of remittances is determined by the
amount of annual taxable services and sales. The following are the parameters for filing a GST/HST
return.

A return can be filed once a year if the annual taxable sales are less than or equal to $1.5 million.

A return is filed every 3 months or quarterly if the annual taxable sales are between $1.5 million and $6
million.

A return should be filed monthly if the annual taxable sales are greater than $6 million.

The CRA does allow more frequencies if the business chooses to do so.

How do you remit GST/HST?

The net amount of GST/HST can be remitted to CRA in one of the following methods:

By making payment to a participating financial institution.

By mailing a cheque and the completed return to the GST Processing Centre or to any CRA Excise Office.

By electronic payment through your financial institution’s online service.

checking notes

Should you keep records?

It is not obligatory that receipts and supporting documents be submitted with the GST/HST return to the
CRA, but they must be kept for 6 years following the period to which they apply. Additionally, all regular
financial books and records must be kept just in case an auditor from the CRA requests them.

Nil Returns(No Tax Owing)

If your business has no net tax to remit and they are not claiming a refund, a GST/HST return should be
filed for each reporting period. Regardless of if there are any business transactions in a reporting period,
a return must still be filed.

stack of papers

handing a check

Penalties

The CRA will charge penalties in cases where the GST/HST return was filed late. The CRA uses certain
rates to calculate penalties based on each circumstance. Rates are always subject to change, so it is
recommended to check the CRA websites.

Interest

The CRA charges interest at a prescribed rate on the following:

Any overdue balance owing on a return.

Late or insufficient installment payments.

Any penalties assessed.

Any other overdue GST/HST amount that must be remitted.

Both the interest on overdue amounts and the interest on penalties are compounded daily. The CRA
uses a prescribed rate to charge interest in the following situations:

A past due balance owed on a return.

Shortage in payments.
Penalties assessed.

All other past due GST/PST amount that the business should remit.

Interests are compounded daily.

writing a note

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Module 7

Unit 1: Purchasing and Inventory

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Effective purchasing and inventory control are essential for maintaining smooth operations in a medical
office. In this unit, you will learn about supply management, supply chain processes, and best practices
for tracking and ordering office supplies. Through case studies and practical applications, you will
develop the skills needed to manage inventory efficiently as a MOA.

This unit covers the following topics:

Introduction to Purchasing and Inventory

Office Supply Management

Supply Chain Management

Supply Management Versus Supply Chain Management

Types of Supplies
Purchasing and Inventory Control

Case Study

Important

Please note that you are required to complete Quiz 7 at the end of Module 7.

Please note that you are required to participate in Discussion Board 7 at the end of Module 7.

Please note that you are required to complete Assignment 2: Excel Table in Module 7.

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Introduction to Purchasing and Inventory

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Productivity

You may wonder why it is important to have adequate stock in a medical office. Having an adequate
stock of supplies helps promote office productivity. It can be very frustrating and unproductive to need a
certain supply, only to find out that there is none in stock. This has a negative impact on productivity in
the office.

To be able to operate successfully, we need the right tools and equipment. Even the smallest items such
as staplers, paper, or letterhead can stop a task at a standstill or, at the very least, cause delay.

Efficiency

Not having access to materials and equipment when they are needed, can interrupt the workflow
process. This delay will negatively affect the efficiency of running any medical office.
Safety and Organization

As a medical office administrator, it is not just the typical medical or office supplies that you should stock
up on, but also safety supplies. These are must-haves in your office so that emergency assistance can be
provided in case someone requires it.

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Office Supply Management

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Office Supply Management

Part of maintaining an efficient and effective office is ensuring that everyone has access to the tools they
need. The goal of office supply management is to ensure that there are adequate supplies available
when needed.

The term office supply management refers to the act of identifying, acquiring, and managing resources
and suppliers that are essential to the operations of an organization. Also known as procurement, supply
management includes the purchase of physical goods, information, services, and any other necessary
resources that enable a company to continue operating and growing.

There are many main goals within supply management. They are:

Cost control
Efficient allocation of resources

Risk management

Effective gathering of information to be used in making business decisions

Carefully monitoring and tracking supplies is a critical MOA administrative function.

Readings

Review figure 9.1 of Chapter 9 in Plunkett's Procedures For The Medical Administrative Assistant
textbook as it illustrates a common checklist of supplies required in a medical office.

Click Here

Operating Costs

In the normal daily running of a business, there are ongoing expenses that are incurred. These are called
operating costs.

In a medical office, both office supplies and medical supplies fall under the umbrella of operating costs.
This area needs to be well managed to eliminate any negative impact on the profitability of the business.

Most medical offices are embracing technology to assist them with automating their medical supply
management process to increase efficiency and accuracy. For example, a simple Excel sheet to track
supplies can help the MOA control cost and maintain inventory at an optimum level.

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Supply Chain Management

Supply chain management is defined as the supervision of the complete process of goods and services
from the acquisition of raw material to the point of consumption. MOAs are not usually involved in all
steps of this process; however, there are 4 key steps that can help the MOA manage the inventory of
supplies in the clinic.

The four steps to help an MOA manager the inventory of supplies in the clinic are as follows:

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Supply Management Versus Supply Chain Management

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The terms supply management and supply chain management are sometimes mixed and can be
confusing. But there is a difference. Supply management refers to the management of how goods and
services flow through the production process—from raw materials to finished goods that end up in the
hands of consumers. This includes shipping, production, and distribution of products, goods, and
services.

Supply chain management requires suppliers and managers to be as efficient as possible. This means
they must make sure activities are streamlined so there are no shortages of inventory, costs are kept as
low as possible, and businesses can remain competitive in the market.
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Types of Supplies

As an MOA, you will be ordering a variety of supplies, from medical supplies to office supplies.

Medical Supplies

Medical supplies are used in medical, dental, hospital, pharmacy, and clinical laboratories. Products
range from simple bandages, tongue depressors, and syringes, to more sophisticated supplies. This will
vary depending on the practice. Below are some examples of medical supplies:

Dressings

Surgical gloves

Disposable needles

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Readings

For more details, refer to pages 186 – 188 of Chapter 9 in Plunkett's Procedures For The Medical
Administrative Assistant textbook.

Click Here

Office Supplies

No office is complete without office supplies. Both small and big corporate offices require and use office
supplies. No business can function effectively and efficiently if they do not have office supplies.
Some basic supplies like paper, pens, and scissors, along with equipment like computers and coffee
machines are commonly found in most offices. As an MOA, it may be helpful to flag supplies at a point
where orders should happen (before you run out).

In medical practice, some additional paper supplies can be found like:

Examination paper for examination table

Disposable gowns

Paper towels

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Readings

For more details, refer to page 188 of Chapter 9 in Plunkett's Procedures For The Medical Administrative
Assistant textbook.

Click Here

Medications and vaccines

Vaccinations are ordered through your local public health unit. It is essential to learn about the ordering
procedures specific to your local unit. You must carefully follow supply handling procedures as well as
adhere to the cold chain. The cold chain refers to the steps that must be taken to ensure that
vaccinations are stored following the manufacturer's requirements. Most vaccines require storage
protocol, and as an MOA you need to be aware of these guidelines.

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Lab Containers

Medical offices routinely collect specimens for laboratory analysis. Kits and containers used are usually
sourced from your local laboratory using a formal ordering process. Be sure to contact your local
laboratory to determine the ordering protocol and monitor these containers as you would any other
office supply. Establish a supply chain relationship with your local lab to ensure efficiency with supplies.

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Readings
For more details, see page 189 of Chapter 9 in Plunkett's Procedures For The Medical Administrative
Assistant textbook.

Click Here

Cleaning and Chemical Products

Items such as soap, paper towels, toilet paper, and cleaning cloths are necessary to maintain a clean,
sanitary, and safe medical office. These items can be provided by your local cleaning and maintenance
supplier. The supplier can provide safety instructions related to the supplied products as well.

Medical supply companies can often provide options for ordering disinfecting and specialized chemical
supplies. Handle all materials according to the industry standards and the manufacturers’ instructions.

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Readings

Refer to page 189 of Chapter 9 in Plunkett's Procedures For The Medical Administrative Assistant
textbook.

Click Here

Equipment

Arrangements should be made with equipment suppliers to have all equipment serviced regularly. To
have an efficient and productive office, all equipment must be in good working condition. Some office
equipment will generate reminders when it needs service.

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Purchasing and Inventory Control

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An MOA should have a systematic approach to maintaining records of supplies ordered. This approach
should include the name and address of the supplier, the cost of all items, and the date on which the
order was placed. This information can be used for reference when reordering and for a cost
comparison. It will also give you an idea about how long a quantity of one item lasts and when it will be
necessary to reorder.

A routine reference to the order records (order book) will ensure that the supplies are always
adequately stocked.

The use of bookkeeping and accounting software such as QuickBooks allows businesses to create
purchase orders and invoices electronically and to store them in an accessible location for quality
control. As an MOA, you may be using some features of this software.

Click on the tabs below to learn more.

Purchase Orders

Packing Slips

A packing slip is a document included with the shipment of supplies or sent electronically. The packing
slip lists the items and quantities shipped. It is essential to compare the packing slip with the content of
the package received. After it has been confirmed that there are no discrepancies in the shipment
received, the packing slip should be compared with the order record to confirm that all supply
requirements have been met.

Invoice

The invoice is a statement of the amount owed for the supplies shipped by the supplier. The quantities
on the invoice should match those documented on the packing slip. If prices were given prior to
shipment, the prices on the invoice should match those on the order record. If there are any
discrepancies in price or quantities, or both, the supplier should be contacted.
Cash Discounts

Suppliers often allow cash discounts on purchases to encourage prompt payment. The cash discount is
referred to as the credit terms. Consult with potential suppliers about their terms of payment. Terms of
payment are usually 2% 10 days or net 30 days. This means that if payment is received within 10 days
after purchase, 2% can be deducted from the total of the invoice; otherwise, full payment is due within
30 days.

In most medical offices, orders will be completed electronically through the portal provided by the
supplier. You may also be able to order by phone, email, or fax. You would have to check with the
supplier on how to order the supplies. Keep a copy of the order as a record to manage the supplies in
the office. In some organizations, it may be necessary to complete a purchase order. The preparation of
the purchase order (PO) is needed for approval of the purchasing request.

A copy of the purchase order should be kept in a pending file until the material is received.

Readings

Refer to figure 9.5 and read page 192 of Chapter 9 in Plunkett's Procedures For The Medical
Administrative Assistant textbook.

Click Here

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