- 14 - Accounting Issues–Background It is a customary and accepted practice in the health care industry for health care practitioners to use the cash method of accounting. PC used the cash method of accounting for both income tax purposes and for bookkeeping purposes and consistently reported the drugs used in patient treatments as supplies and not as inventory. With the exception of its Federal income tax return for 1993, Mid-Del used the cash method of accounting for income tax purposes and consistently reported the drugs used in patient treatments as supplies and not as inventory. Mid-Del used the accrual method of accounting for bookkeeping purposes. PC reported the following gross receipts, direct costs associated with patient treatments, and gross profit for the taxable years ending April 30, 1993, 1994, and 1995, using the cash method of accounting: TYE Gross Other costs Gross Medical supplies and Medical receipts1 profit drugs included in supplies and other costs drugs as a percentage of gross receipts 04/30/93 $1,519,988 $425,554 $1,094,434 $183,136 12 04/30/94 2,106,670 454,982 1,651,688 367,793 17 04/30/95 2,100,440 513,006 1,587,434 451,976 22 1 Net of returns and allowances.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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