A community hospital lost money during its most recent fiscal year because it admitted a greater number of patients who had no healthcare coverage. A few weeks after the end of the fiscal year, the city approved an additional $500,000 subsidy for that care. How should the hospital accountants handle that transaction?
What will be an ideal response?
The money was for services rendered in the previous fiscal year. Based on accrual accounting, the money should be posted on the books for the previous year as a debit to the Cash account and an asset to the Inpatient Services account.
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What will be an ideal response?