Accurate and complete financial recordkeeping is important to any hospital owner, but is also important to those who work
with the veterinarian. People both inside and outside the hospital all depend on the accurate recording of financial transactions.
The person who handles the job of bookkeeping within the practice must be organized and follow the necessary steps to process
the information in order to provide dependable information to make management decisions.
How you process your books and records depends on your accounting method. The two basic methods to choose from are cash basis
accounting and accrual accounting. The main difference between these two methods is at what point do you record income and
expenses. On a cash basis you are only recording transactions when your money flows in or out of your bank account. On an
accrual basis you are recording income and expenses when they are incurred not necessarily when money is received or paid.
If you are utilizing QuickBooks software to process your transactions you can determine the method that you are currently
using. To do this you would click on edit, then Preferences and select Reports & Graphs. On the Company Preferences tab it
will indicate what method is currently being used.
In your recordkeeping system it is called double-entry bookkeeping. For every transaction that is entered there is a debit
and a credit. In the accounting world this is opposite from a bank. If a bank debits your bank account they are taking money
out and in your accounting system a debit is putting money into your bank account. For asset and expense accounts you will
increase their balances with a debit and decrease with a credit. For liability and income accounts you decrease their balances
with a debit and increase with a credit.
Before processing any transactions you need to understand your chart of accounts. There are five basic account types in accounting:
assets, liabilities, equity, income and expenses. QuickBooks breaks these basic account types into the following:
• Five types of assets: Bank, Accounts Receivable, Other Current Asset, Fixed Asset, and Other Asset
• Four types of liabilities: Accounts Payable, Credit Card, Other Current Liability, and Long Term Liability
• Income and Expense types: Income, Cost of Goods Sold, Expense, Other Income, and Other Expense
To access your chart of accounts in QuickBooks you would click on Lists then select Chart of Accounts. You can print the report
from this screen also by clicking the reports box and select Account Listing. In addition to your chart of accounts your
accounting preferences in QuickBooks should be reviewed. To do this you would click on edit, then Preferences and select Accounting.
On the Company Preferences tab the box for Use account numbers and Require accounts should be checked.