ABSTRACT
Basic Accounting Principles Every business needs a system to reflect its financial status. This system provides information about revenues, expenses and profits. It will also reflect what the business owns (its assets) and what it owes (its liabilities), and what the business is worth (capital, net worth or equity). The income statement and the balance sheet present a picture of the clinic's financial statement. The income statement includes revenues minus expenses that equal income. Income minus the physician's salary is recorded on the balance sheet that includes assets, liabilities and capital (net worth). The resident must understand that cash flow is a monthto-month projection about adequate cash to operate your practice and meet your personal living expenses. If the practice is new and just expanding, it may need financial backing until appropriate cash flow is achieved. Financial institutions are willing to make loans to young physicians, as they are considered to be a good risk, but they will need to have a comprehensive practice business plan and cash flow budget. Credit-worthiness is influenced by how much is to be borrowed, proposed use of the money, repayment plans, the practice outlook and the character of the borrower.
