The balance sheet and income statement articulate, i.e., the income statement takes you from one balance sheet to another. Differentiate charity care from bad debts. An HCO never expects to collect on charity care, so it is shown as a footnote. A bad debt is an amount that was accrued in revenues because it appeared to be collectible, but it later is written off as an expense on the income statement because it was not collectible. LO3.10 Differentiate a cost from an expense.
Costs affect expenses.
An expense is the portion of a cost that has been put in an income statement for a given period. LO3.11 Define an asset and explain how an asset is valued. An asset is an expense that has not happened yet. An asset is valued as the discounted value of the revenue that something will produce. It needs to profit to buy replacement assets so it can stay in business.