Question

1. What is a balance sheet? Why is it important for leadership of a healthcare organization to monitor its balance sheet?

2. Place an "X" in the appropriate box for each balance sheet item listed below.

Note: Some balance sheet items may fall into multiple categories, therefore, choose the most relevant option. Each category below must have only one "X".

	Short-Term Asset	Long-Term Asset	Short-Term Liability	Long-Term Liability
Cash on hand
Accounts receivable
Equipment
Mortgage payable
Buildings
Current Note due
Inventory
Bonds payable
Payroll taxes due

Answer 1

What is Balance Sheet:

Balance sheet is a Financial Statement which gives the status of Financial affairs of an organization at a given point of time. It gives in monetary term assets the organization owns and the liabilities of the organization to different stakeholders like suppliers, lenders, employees (if there is wages payable), service providers (accrued expenses, if any) and stockholders equity.

It is important for leadership to monitor its balance sheet , because the balance sheet reveals whether there is sufficient liquidity to meet short term and long term obligations of the organization, it helps in planning for purchase of assets and in general stewardship of the organization.

	Short-Term Asset	Long-Term Asset	Short-Term Liability	Long-Term Liability
Cash on hand	X
Accounts receivable	X
Equipment		X
Mortgage payable				X
Buildings		X
Current Note due			X
Inventory	X
Bonds payable				X
Payroll taxes due			X

Explanation:

Cash , Accounts Receivable and Inventory are owned and are liquid (can be converted into cash in a short time). Hence these are Short Term Assets

Equipment and Buildings are Fixed assets which are used for a long term. Hence these are long term assets.

Current note due and Payroll taxes due are liabilities (amount owed) which need to be paid in less than one year. Hence , these are short term liabilities.

Mortgage Payable and Bonds Payable are liabilities payable in more than one year. Hence these are Long Term Liabilities