Value added principle Week 4 From Chapter 10 complete question 2 page 382 on how the value added principle applies to managerial accounting information Give at least one example of value added information used by a health care organization You must respond to at least two of your classmates postings to receive full credit What does the value added principle mean as it applies to managerial accounting information The value added principle as it applies to managerial accounting information means that because management accounting is only limited by the value added principle it uses more estimates and fewer facts than financial accounting Edmonds 2010 pg 383 Management accountants are free to take part in any information gathering and reporting activity just as long as the activity adds value in addition to the cost Edmonds 2010 pg 383 Management accounting uses both financial and non financial information and is generally intended for the use of internal users such as managers and executives who use the information to make decisions that help achieve the goals and objectives of the organization Managerial accounting focus on past present and future trends and report on a continuous basis Edmonds 2010 pg 384 Managerial accounting used estimates that promote relevance and enable timeliness D K Healthcare offers a variety of value added services including inventory management cost containment services information technology systems and specialized marketing programs Business Editors Health Medical Writers 2003 Give an example of value added information that may be included in managerial accounting reports but is not shown in publicly reported financial statements A good health care example I think that most of us can relate to is going to the hospital or lab for blood tests All any patient wants to pay for is the test results However in a usual lab experience to get blood drawn the patient first signs in then waits to be called back to go through registration and insurance verification etc Then the patient waits again before the actual blood draw Other Non value added activities that take place are moving to different stations to complete registration waiting for someone from registration waiting for a spot to open for the blood draw then moving into the room and then waiting for a phlebotomist to draw the blood A blood draw normally takes about two or three minutes If a patient has a 30 minute total experience at the lab then 27 of those minutes are non value added Once these non value added steps are identified then you can start to eliminate reduce or simplify them Stephani Dayton References Business Editors Health Medical Writers 2003 Jan 22 D K healthcare resources reports Q2 fiscal 2003 results and updates full year guidance Business Wire Retrieved from http search proquest com docview 446374521 accountid 32521 Edmonds T Survey of Accounting 2nd Edition 2nd ed McGraw Hill Primis Custom Publishing Retrieved from http online vitalsource com books 0390124117 page 384