Healthcare finance: an introduction to accounting and financial management. (6th ed.). Chicago: Health Administration Press. ISBN: 978-1567937411. Gapenski Text: responsible for Chapters 5 and 6 1. Financial management is based on two disciplines: financial accounting and managerial accounting. Explain in your own words how the two disciplines fit into the overall financial management function. Using examples if possible, show how they are similar and how they differ. Goals for the paper Explain the differences between financial and managerial accounting. Apply cost-allocation principles across a wide range of situations within health services organizations. Articulate upcoming trends, and their likely impacts, in health care delivery and financing . lecture notes – We began this course by saying that health care financial management is based on two separate disciplines: Financial accounting Managerial accounting We have created a foundation of knowledge built on financial accounting. You learned about the basic financial statements and how they are created and used, as well as some of the tools used in analysis of those statements. Now, we are going to venture into the realm of managerial accounting. We will discuss how managers utilize financial data to make both organizational and departmental decisions. COSTS We will begin with the costs of providing services to our customers, as those costs play such a large role in the decisions made. The term “cost” seems simple enough, but as you begin to use it in managerial decision making, you will find that it has many different uses and meanings. Those different meanings usually come from the adjective connected to the term. For example, costs may be: direct or indirect fixed or variable budgeted or actual non-controllable or controllable The definitive adjective identifies how the cost is used. We will highlight some of those categories here, to supplement the discussion in the text and to provide you with additional examples. Direct vs. Indirect Costs Costs are designated Direct or Indirect based on whether they can be traced to, or identified with, a specific department, cost center, or activity. Those that can be so identified are classified as Direct Costs. Those that cannot are classified as Indirect Costs.