[retiredguy123]

Originally Posted by SHIBUMI

coming from a 2 star person..........keep it up and you may rise to 3 star shortly

I agree, but note that most small to mid-size medical offices use the cash based accounting system, not the accrual system.

[Pugchief]

Originally Posted by Pugchief

That depends on whether you are using cash or accrual accounting. That is correct for cash, but not for accrual.

In a cash system, you never received the income in the first place, so there is nothing to deduct.

Originally Posted by GregR

I am not a CPA, but an important distinction is that if you use accrual accounting, your revenue is booked when it's earned, and you pay income tax on it even though you never got any actual cash from the customer yet. Eventually, if the customer never pays or you accept some lesser amount, that difference can be booked as a bad debt, but the write-off is against taxes you already paid. The long-term net is the same. Either you never pay taxes on revenue you never receive in a cash system, or you can claim a write-off in an accrual system, but only against taxes you had to pay up front.

Correct.

Originally Posted by dewilson58

Wrong.

The doctor is not allowed to book the "Charged" rate.
The doctor books the net agreement charge(s)......medicare &/or private insurance.
The doctor tracks the Charged amount, but it is NOT books under the accrual method.

"Under Generally Accepted Accounting Principles (GAAP)—specifically ASC 606 (Revenue from Contracts with Customers)—a practice can only recognize the allowed rate (the amount it actually expects to collect) as net revenue."

You are also correct, except about GregR being wrong. He never said the part in red. Maybe you inferred it, but it was not stated.

Originally Posted by retiredguy123

I agree, but note that most small to mid-size medical offices use the cash based accounting system, not the accrual system.

And also correct.

[It's Hot There]

Originally Posted by Pugchief

Correct.



You are also correct, except about GregR being wrong. He never said the part in red. Maybe you inferred it, but it was not stated.



And also correct.

GR is wrong.
GR stated, "Eventually, if the customer never pays or you accept some lesser amount, that difference can be booked as a bad debt, but the write-off is against taxes you already paid."

This is what the tread is about.
So GR did state the red wording.

You can pretend he's talking about something else, but it's very clear he is talking about the OP post.

[Pugchief]

Originally Posted by It's Hot There

GR is wrong.
GR stated, "Eventually, if the customer never pays or you accept some lesser amount, that difference can be booked as a bad debt, but the write-off is against taxes you already paid."

This is what the tread is about.
So GR did state the red wording.

You can pretend he's talking about something else, but it's very clear he is talking about the OP post.

Sigh.

Do you understand the difference between Cash and Accrual accounting? I think not.

Smaller businesses generally use the Cash system. Income is only recorded as it is received. So you can't write off "bad debt" in a Cash system because the funds were never received in the first place.

Larger businesses use the Accrual system. Income is booked as it is charged out. If there is bad debt, you can deduct/write this off because it was originally booked as income unlike in a Cash system.

Go back and read what Greg R wrote, and if anything he said is in opposition to what I just explained, please quote that specific part.