SILVER-GATE SCHOOL OF HEALTH SCIENCES AND

TECHNOLOGY, ZARIA

COURSE TITLE

ANATOMY AND PHYSIOLOGY II

COURSE CODE
CHE104

COMPILED BY
MR. BB

1
General Introduction

Accounting measures process and communicates financial information

about organization economic activities including the PHC. It also conveys
this information to a variety of users including investors, creditors,
management and regulators

Course Aim

The course aim at equiping student with the knowlwdge and skills in
accounting to enable them operate a simple accounting system.
Course Objectives

At the completion of this course, student will be able to:

• Describe the basic principle of accounting system.

• Discuss the difference between government and commercial
accounting
• Identify various books used in accounting
• Discuss the concept of budgeting

2
 MODULE 1: PRINCIPLE OF ACCOUNTING

At the end of the lecture,student should be able to,

-Define accounting system

-Describe the principle of account

-Describe money and types.

Definiting of Accounting System in PHC.

Accounting is the process ofrecording, classifying, selecting, measuring, interpreting and

communicating of financial data of an organization to enable users make decision.

An Accounting system should lead to proper recording of transactions entered into by

the business during the process of the accounts and drawing up the final statements
through, the balance sheet and profit, and loss accounts so as to know the financial position
of the business.

Importance of Accounting

1) Accounting information can be used for decision making.

2) It provides permanent records for all transaction.
3) It helps to determine the profitability of a business.
4) Helps to prevent fraudulent practice.
5) The record shows the income and expenditure.
6) The assets and liabilities are shown by the accounting records.

Users of Accounting Information

1) Management .
2) Employee
3) Owners
4) Government
5) Tax authorities
6) Bank
7) Competition

3
Accounting Stages

There are three (3) basic stage of accounting which include..

1) Data collecting
2) Data processing
3) Reporting.

ACCOUNTING PRINCIPLES

Accounting principles are the rules and guideline that PHE or companies must follow when
reporting financial data.Below are the most fundamental accounting principle.

1) All transaction to have debit and credit vouchers of equal amount

2) Distinctions must be drawn between capital expenditure and revenue receipts
3) Financial statement must be prepared on historical cost basis
4) Investment must be value
5) Expenditure and income to be treated on accrual basis
6) Unsold stock at the end of the year should be brought into account and valued on a
recognized basis
7) Asset (fixed assets 1 must be accounted for at historical cost
8) Depreciation should be provided on asset.

Money

Money is any object that is generally accepted as payment for goods and services and
repayment of debt in a given country.

Functions of Money

1. Medium of exchange
2. Unit of account i.e measuring of something (asset and liabilities in a specific currency
3. Store of value
4. Standard for deferred payment
5. It encourage lending and borrowing
6. It encourage division of labour and specialization

Characteristics of Money

1. General acceptability: It must be acceptable by all economic agents in the country in

which it is used as payment for goods and services, and in settling debts and
obligations.
2. Divisibility: It should be available in units of a standard size sufficiently divisible to
facilitate the purchase and sale of goods and services over a wide range of prices.

4
 3. Durability: It should be able to last for a long time without losing its value. This is the
reason why high-quality papers are used to print paper currency and precious metals
are used in minting coins.
4. Portability: Money should be convenient to carry about for easy transfer to other
people during transactions.
5. Homogeneity: One unit of money must be the same in all respects (i.e. identical)
everywhere throughout the country. This will promote general acceptability.
6. Relative Scarcity: It must be unique, not something that can be found easily
anywhere. And it must not be supplied in excess so as not to lose its value whereby it
will not be able to serve effectively as a store of value and a standard of deferred
payment.

Types of Money

The main types of money are classified as:

1. Paper Money and Coins: These are monies issued exclusively by the financial
institutions, such as the Central Bank of Nigeria (CBN), Federal Reserve of the United
States, etc. They are backed by law and hence, accepted in exchange for goods and
services and in settlement of debt obligations.
2. Bank Deposits: These are monies deposited with financial institutions, especially
commercial banks, which are withdrawable or transferable without prior notice by
writing a cheque. Such deposits are held in the current account of the customer, and
a fee is charged for processing the cheque.
3. Quasi-money or Near Money: These are assets which adequately serve as a store of
value but do not fulfil the medium of exchange function. Examples include saving
and time deposits, stock and shares, postal and money orders, treasury bills, etc.
What constitutes quasi-money varies from one country to another.
4. Visible Money: These are physical currency which circulate from one hand to
another in the course of economic transaction, or by being reassigned from person
to person for accounting purposes while being held on deposit at a bank or similar
institution. In the second case, tokens or paper notes that substitute for and
represent the deposited money are passed from person to person in daily
transactions and settled later by financial institutions. Paper notes and cheque are
examples of these kinds of money.
5. Invisible Money:These are peer-based money, such as bitcoin, financial service etc.
This type of money is electronically based on electronic accounting entries that can
be used as a medium of exchange. Invisible Moneyare a type of money that can be
used to facilitate international transactions. Invisible money is becoming more
widely used and adopted as a medium of exchange for daily transactions.

5
 MODULE 2: GOVERNMENT ACCOUNTING AND COMMERCIAL ACCOUNT

At the end of the lecture, student should be able to,

-Define Government Accounting

-State the users of Government Accounting

-Differentiate between Government accounting and commercial accounting.

Definition :Government accounting refers to the process of recording and the management
of all financial transactions incurred by the government which includes its income and
expenditures.

Users of Government Accounting

The users of government accounting information are:

1. The president, Governor and local government chairman.

2. Government
3. General public
4. Legislators
5. International financial institutions e.gIMF,World Bank.
6. Foreign and local creditors.

Purpose of Government Accounting

1. To serve as a basic for government planning

2. To depict the source of government revenue t
3. To show the basic of disbursement of government revenue
4. To serve as a control instrument and for decision making
5. To give evidence of financial accountability.

Distinction between Government accounting and Commercial accounting.

1. The main goal of the government is to provide goods and services at reasonable
prices to the people, whereas commercial enterprises maximizes profit
2. Government account is basically on cash basis, whereas that of commercial
enterprises is on accrual basis.

6
 3. The target of the product of government is the public without discrimination,
whereas the target of commercial enterprises concentrate on those who have the
ability to pay.
4. Government account is governed by the constitution of the country, while
commercial is governed by company and allied matter act of 1990.
5. Government reports to the general public whereas commercial enterprises report
to the shareholders.
6. The cost of asset is written off in the year of purchase under government
accounting whereas it must be spread over the useful life of the asset in case of
commercial enterprises.
7. Government derives revenue through taxation, fines while commercial
enterprises derive revenue through sales of goods and services.

MODULE 3: PRINCIPLE OF DOUBLE ENTRY BOOK KEEPING

Performance objectives:

At the end of this lecture,students should be able to:

1. Explain the rules of double entry.

2. Apply the rules of double entry.

Double entry book keeping.

The principle states that for every debit entry,there must be a corresponding credit entry
and vice-versa.it is the foundation of book keeping. Experience has shown that many
students failed accounts due to lack of in-depth knowledge of this principle.

The principle operates on the basis that every financial transaction must have two aspects.

Summary of the principle

Dr Receiver (receiving account)

Cr Giver (giving account)

The procedures are:

a) The keeping of books of account

b) The division of each book into separate accounts
c) Each account is divided into two halves,left hand side, debit(Dr) and right hand side,
credit (Cr)
d) All transactions must be recorded in two accounts,one account is debited and
another account credited

7
The giver (giving account) is credited with and the value of whatever it receives and the
receiver (receiving account) is debited with the same amount.

Cash and credit transactions.

Financial transactions may be classified to cash and credit transactions.

Cash transactions

The buyers pay immediately for goods bought. Here, no account will be opened in respect of
a supplier or customer.

Steps in recording cash transactions.

a) Prepare two accounts.

b) Identify the ‘’Giving account’’ and the ‘’Receiving account’’.
c) Now apply the principle Cr (Giver), Dr(receiver).

The following most be memorized

A debit entry represent A credit entry represent

I. An increase in the value of assets A decrease in the value of assets
II. A decrease in the amount of a liability An increase in the value of liability
III. An item of expenditure or expense An item of income or gain

MODULE 4: SUBSIDARY BOOKS AND SOURCE DOCUMENTS

At the of this Lecture,students should be able to:

1. Identify the subsidiary books and source documents.

2. Explain the subsidiary books and source document.

There are two books accounts:

1. Principle books
2. Subsidiary books.

Source documents.

All entries in noted that the books must be supported by document evidence. Therefore,
the source documents provide details information for the preparation of the books. The
documents are:

1. Invoice.
2. Credit note
3. Debit note

8
 4. Petty cash voucher
5. Statements of account
6. Receipts.

Invoice

The invoice sets out the full details of goods sent by the suppliers to the buyer
stating the quantity, price, discount given and terms of payment.

Credit Note

This is a document sent by the seller to the customers for reduction in the amount
owed by him. It arises because some goods are damaged or not supplied as ordered.

Debit Note

This is a document sent by the seller to the buyer to correct an undercharge or when
are not charged on the invoice

Petty Cash Voucher

This covers payments credited to the petty cash.

Statements of Accounts

This covers is a documents sent by the seller to buyer at regular intervals,usually

showing credits and debits and the balance due.

Subsidary Books

Having analysed the sources of information for the subsidiary books. Then we can now
define subsidiary books at the books of original or prime entry. They are used to make first
entry of transactions.

Divisions of Subsidiary Books

Subsidiary books can be divided into six books, which will be expatiated separately to show
their nature.

1. Sales day book or sales journal

2. Purchase day book journal
3. Sales returns or returns in wards journal
4. Purchase returns or Returns outwards day book or returns outwards journal
5. Cashbook

Sales Day Book Or Journal

9
This is a book of original entry in which credit sales are recorded before posting to the
ledgers. In the sales day book, cash transactions must not be recorded.

purchase day book.

This is the book for recording goods bought on credit from the suppliers and it can be
referred to as the purchase journal. Addition of the purchases journal is done monthly or
week.

Purchase Returns Book

This is the book for recording goods returned to the supplier as of one reasonsanother e.g
defectiveness, damages or wrong kind etc.

Sales Returns Journal

The sales return journal is used to record goods returned by customers.

Cash Book

This is a double entry account used to record cash transactions and also transactions with
the bank.

MODULE 5: CASH BOOK

At the end of this Lecture student should be able to:

1. identify the form of single and double column cash book.

2. Post transactions into single and double columnar cash book
3. Identify the form of three column cash book.
4. Post transactions into three column cash book.
5. Post transactions of petty cash book imprest system.

Cash book is the book for recording detailed particulars of all received and paid. All cash
transactions with cheque must pass through the cash book. The cash book is a subsidiary
book and it is really part of the principle book called ledger. It is the book for cash
receipts,payments and transactions with cheques. In the treatment of the cash book,the
principle of double entry system will remain unchanged.Any transaction on credit must not
appear in the book.

Types of cash books:

1. Single column cash book.

2. Double column cash book.
3. Three column cash book.

10
4. Petty cash book.

SINGLE COLUMN CASH BOOK.

A single column cash book of original entry which is used to record all cash received any
payment.The cash book can be divided into two sides;that is Debit (Dr) side and Credit
(Cr)side.Debit all cash received and credit payment.

Dr (SPECIMEN)SINGLE COLUMN CASH BOOK Cr

Date Particular F Amount Date particular F Amount

After posting all the transactions,into the cash book, the balancing is carried out by adding
up all receipts and payments separately and then find out differences between them that
will serve as cash at hand.

Balancing a single column cash book

The single column cash book has only one money column which is totaled and balanced like
a traditional T-account. At the end of each month or another appropriate period, the
amount column of both sides aretotaled. The difference between totals is written on the
lighter side below all other entries. This difference is the closing cash balance for the current
period and is usually termed as balance carried down (balance c/d). In next period, it
becomes the opening cash balance and is usually termed as balance brought down (balance
b/d).

Note: The debit side (receipt side) of a single column cash book is always heavier than the
credit side (payment side) because we cannot pay more cash than we receive during a
period

Example 1: Write up a Silvergate Primary Health Care Centre single column cash book for
the month of April 2020, from the following?

1 Cash in hand ………………..…. 1,650

2 Cash sales of drugs ……………….…….. 16,000

3 Paid cash to suppliers………….. 4,000

11
4 Wages paid in cash ……………… 2,250

4 Cash sales of Medical Equipment ………………………… 18,000

9 Paid cash to staff ………………………… 420

11 Paid salaries by cash ………….…… 2,850

12 Credit Sales ……..…………..……… 1,000

17 Paid cash for repairing of Thermometre ……………… 360

19 Sales by cash ………………..……… 11,400

21 Paid office expense …………………. 180

25 Paid office rent …………………… 3,600

26 Cash sales …………………………… 19,200

27 Paid electricity bill .………….……..…. 900

28 Cash collected from debtor…….…….. 4,500

29 Goods Purchase by cash ………..……….……. 2,000

30 Paid bank loan ……………..……… 3,000

Example 2: The Harper Company uses a single column cash book to record all cash
transactions. It engaged in the following cash transactions during the month of September
2020.

 Sep.01: Cash in hand at start of the month $4,654.

 Sep.02: Paid salaries to employees for the last month $3,000.
 Sep.05: Cash received from S & Co. for a previous credit sale $2,720.
 Sep.06: Merchandise purchased for cash $1,400.
 Sep.07: Merchandise sold for cash $4,700.
 Sep.10: Office furniture purchased for cash $3,080.
 Sep.12: Stationary purchased for cash $170.
 Sep.15: Merchandise sold for cash $9,000.
 Sep.17: Cash paid to A & Co. for a previous credit purchase $1,780.
 Sep.20: Merchandise purchased for cash $2,460.
 Sep.21: Merchandise sold for cash $4,680.
 Sep.24: Cash received from S & Co. for a previous credit sale $2,400.

12
  Sep.28: Cash paid for office rent $1,600.
 Sep.30: Merchandise sold for cash $7,200

Required: Record the above transactions in a single column cash book (simple cash book)

Two column cash book/Double column cash book.

In this types of cash book,two separate accounts cash and banks are combined for the sake
of convenience. There will be separate columns for date, particulars, folio cash and bank.

Cash Column.:Cash receipts and payments are recorded.

Bank Column.:All payments made by cheque and money received and paid Into the bank
are recorded.

Dr TWO COLUMN CASH BOOK Cr

Date Particulars F Cash Bank Date Particulars F Cash bank

Recording cash transactions:

1. All cash receipts are recorded in cash column on the debit side and all cash payments
are recorded in cash column on credit side of the double column cash book.
2. If cash is received from a debtor or customer and is deposited into the bank account
on the same date, the entry will be made in the bank column on the debit side, not
in the cash column.

Recording bank transactions:

1. When a cheque is received and the same is deposited into the bank account on the
same date, the amount of the check is entered in the bank column on the debit side.
2. When a cheque is received and the same is not deposited into the bank on the same
date, the amount of the check is entered in the cash column, not in the bank column.
3. When a cheque received from a receivable on a date subsequent to its receipt is
deposited into the bank account, the entry is made in the bank column on the debit
side and in the cash column on credit side. It is called a contra entry.
4. When a cheque is issued, the amount of the check is entered in the bank column on
the credit side.

13
Recording contra entries:

The contra entry is an entry which involves a cash account and a bank account and which is
recorded on both debit and credit sides of the double column cash book at the same time.
This entry is not posted to any ledger account because both debit and credit aspects of
transaction are handled within the cash book and the double entry work is completed. In
posting reference column, the letter “C” is written to denote that the entry is a contra entry
and will not be posted to any ledger account. A contra entry is made in the following
circumstances:

Balancing and posting a double column cash book

Both cash column and bank column of double column cash book are totaled and balanced at
the end of an appropriate period. The process of balancing and posting a cash book has
been explained in detail in single column cash book article. The same process is also
applicable to a double column cash book.

Example 1The Edward Company uses a double column cash book to record its cash and bank
related transactions. It engaged in the following transactions during the month of March
2018:

 March 01: Cash balance $1,450 (Dr.), bank balance $1,500 (Dr.).
 March 02: Paid Mark & Co. by cheque $120.
 March 04: Received from John & Co. a cheque amounting to $400.
 March 05: Deposited into bank the cheque received from John & Co. on March 04.
 March 08: Purchased stationary for cash, $25.
 March 12: Purchased merchandise for cash, $525.
 March 13: Sold merchandise for cash, $1,800.
 March 15: Cash deposited into bank, $850.
 March 17: Withdrew from bank for personal expenses, $40.
 March 19: Issued a cheque for merchandise purchased, $630.
 March 20: Drew from bank for office use, $150.
 March 22: Received a cheque from Peter & Co. and deposited the same into bank
immediately, $880.
 March 25: Paid a cheque to Daniel Inc. for $270.
 March 26: Bought furniture for cash for office use, $175.
 March 28: Paid office rent by cheque, $120.
 March 29: Cash sales, $650.
 March 30: Withdrew from bank for office use, $145.
 March 31: Paid salary to employees by cheque, $300.

14
Required: Record the above transactions in a double column cash book and post entries
therefrom into relevant ledger accounts.

Example 2:

Enter the following transactions of M. Rauf in a Double Column Cash Book and post them to
concerned accounts in ledger:

2020 =N=

Jan. 1 Cash in hand 100,000

Jan. 1 Cash at Bank 60,000

Jan. 3 Cash Sales 40,000

Jan. 4 Paid M. Arshad by a cheque 14,000

Jan. 6 Received a cheque from Babar 8,000

Jan. 8 Cash deposited into bank 19,000

Jan. 10 Drew from bank for office use 15,000

Jan. 11 Drew from bank for personal use of owner 24,000

Jan. 12 Cash purchases 57,000

Jan. 15 Received a cheque from S. Rashid 10,000

Jan. 17 Paid Arshad Khan by a cheque 36,000

Jan. 24 Cash sales 33,00

Jan. 31 Salary paid by cheque 14,000

Three Column Cash Book

The three columns cash book represents three accounts: cash, bank and discounts
combined into one book.it follows the simple principle as that of the two-column cash book.
In the three column cash book,discounts allowed and discounts received will be introduced.

Discount Allowed And Discount Received

15
 Discount allowed:This is the discount given to the customers for prompt payment of their
accounts.It must be treated as an expense and hence debited to discounts allowed and
credited to the personal accounts of the customers.

Discount received:This is the discount received from suppliers for prompt payment of our
accounts.it is treated as revenue and hence it is credited to the discounts received account
and debited to the personal account of the suppliers.

Dr THREE COLUMN CASH BOOK Cr

Date Particulars F Discount Cash Bank Dat Particular F Discounted received Cash bank
Allowed e

Petty cash book.

The petty cash book is the book for recording small –disbursementsi.e expenses. The
rational behind the system is to reduce the numerous cash payments for small expenses.
The conventional system for recording petty cash transactions which is generally adopted is
called the.In this system, a specified sum is given to the petty cashier at the accounting
period. This specified sum is called float.

Advantages of the Imprest System

The imprest system claims the following advantages:

1. It saves the time of the chief cashier who is very busy with the main cash book.
2. It reduces the chances of misuse of cash because petty cashier is not allowed to keep
idle cash with him.
3. It reduces the chances of misappropriation as the imprest cash is a very small
amount.
4. Errors are rectified very soon as the record of petty cash is checked by the cashier
periodically.
5. It trains young staff to handle money with responsibility.

Types of Petty Cash Book

The petty cash book is of the following two types:

1. Simple Petty Cash Book

2. Analytical Petty Cash Book

Simple Petty Cash Book

16
 Simple Petty Cash Book is just like the main cash book. Cash received by the petty cashier is
recorded on debit side and all payments for petty expenses are recorded on credit side in
one column.

Analytical Petty Cash Book

It is the most advantageous method of recording petty cash payments. In this type, a
separate column for each petty expense is provided on credit side. When petty expense is
recorded in total payment column, the same amount is recorded in the relevant petty
expense column.

Dr Cr

Receipt F Date Details Voucher Total Sundry Stationery Transport Cleaning

No expenses

Example 1

Jan 1 – Cashier gives N150 as a float to Petty Cashier

The following payments were made and vouched for during January

Jan 2 – Stamps N8

Jan 5 – Taxi Fare N12

Jan 8 – Cleaning Expenses N15

Jan 14 – Envelopes N9

Jan 18 – Bus Fare N11

Jan 22 – Cleaning Expenses N15

Jan 23 – First Aid Kit N18

Jan 26 – Stamps N8

Jan 28 – Travel expenses N5

Jan 30 – Tea and coffee N4

The expenses are analysed under the following headings: Postage and Stationery, Travel,
Cleaning, Sundries

17
 MODULE 6: BUDGETING

At the end of this Lecture student should be able to:

1. Define Budget.
3. State purpose of Budget
4. Identify the Type of Budget
5. Effect of Improper Budget

Definition of Budget: A budget is a financial plan for a defined period, often one year. It may
also include planned sales volumes and revenues, resource
quantities, costs and expenses, assets, liabilities and cash flows. Companies, governments,
families and other organizations use it to express strategic plans of activities or events in
measurable terms.

Purpose of Budgeting

1.It serve as a goal post for implementation of programm intended to execute

2.It also serve as a tool costing how much money to be spent on PHC programmes
3.To know how muchmoney to disburse for various PHC programme
4.It serve as tool to control the financial behaviour of PHC system
5.It depicts the manpower strength of the PHC setting and so indicate whether more is
needed
6. It shows the financial position of existing health facilities and equipment and those
required
7. It serves as an action plan for PHC activities
Types of Budgeting

1. Sales budget – an estimate of future sales, often broken down into both units. It is used
to create company and sales goals.
2. Production budget – an estimate of the number of units that must be manufactured to
meet the sales goals. The production budget also estimates the various costs involved
with manufacturing those units, including labour and material. Created by product
oriented companies.

18
3. Capital budget – used to determine whether an organization's long-term investments
such as new machinery, replacement machinery, new plants, new products, and
research development projects are worth pursuing.
4. Marketing budget – an estimate of the funds needed for promotion, advertising, and
public relations in order to market the product or service.
5. Project budget – a prediction of the costs associated with a particular company project.
These costs include labour, materials, and other related expenses. The project budget is
often broken down into specific tasks, with task budgets assigned to each. A cost
estimate is used to establish a project budget.
6. Revenue budget – consists of revenue receipts of government and the expenditure met
from these revenues. Tax revenues are made up of taxes and other duties that the
government levies.
7. Expenditure budget – includes spending data items.
8. Personal budget – A budget type focusing on expenses for self or for home, usually
involves an income to budget.

Effects of improper Budget

1. It give room to fraudulent act
2. Difficulty in achieving financial goal
3. It lead to lack of saving
4. It also lead to less financial control
5. It lead to overspending
6. Shortage of drugs in PHC
7. Misplacement of priorities
8. Clients and patient may stop patronizing the health facility
9. It also lead to failure of achieve objective

MODULE 7: FINANCIAL REPORT/ STATEMENT

At the end of this Lecture student should be able to:

1. Define financial Report.

2. Identify the component of financial report.
3. Reasons for financial Report.

Definition: Financial reports are written records that convey the business activities and the
financial performance of a company. Financial statements are often audited by government
agencies, accountants, firms, etc. to ensure accuracy and for tax, financing, or investing
purposes.

Component of Financial Report/Statement

19
  Balance sheet
 Income statement
 Cash flow statement.
1. The balance sheet provides an overview of assets, liabilities, and stockholders' equity
as a snapshot in time.
2. The income statement primarily focuses on a company’s revenues and expenses
during a particular period. Once expenses are subtracted from revenues, the
statement produces a company's profit figure called net income.
3. The cash flow statement (CFS) measures how well a company generates cash to pay
its debt obligations, fund its operating expenses, and fund investments.

Reasons Financial Reporting is Important

1. Tax purpose
2. Showing of financial position of the firm
3. Examining of cash flow of the business in term of profitability
4. Analysis of financial report is crucial in making decision

MODULE 8: DRUG REVOLVING ACCOUNT AND COST RECOVERY IN PHC

At the end of this Lecture student should be able to:

1. Define Drug Revolving fund.

2. Know how Drug Revolving fund work
3. Identify the Steps and Procedures in Drug Revolving Fund
4. Define cost Recovery
5. Method of cost Recovery
6. How to calculate cost recovery

Definition:Drug Revolving Fund (DRF) is a system whereby the revenue generated from the
sale of drugs to patients is used to purchase new drugs and ensure availability, effective and
efficient system. DRF is also seen as a cost-recovery or “user fee” system to ensure that
drugs are made available and affordable in public health care facilities. Its scheme focus is
to ensure the sustainability and continuity of the essential drugs program.

HOW DRF SCHEME WORKS?

DRF Scheme starts with one-time capital investment (seed money), provided by the
government, donor agencies or interested communities which is used to purchase an
original stock of essential and commonly used medicines to be dispensed at prices sufficient
to replace the stock of medicines and ensure a continuous supply. Medicine financing can
be in different forms which include:

20
 Managed care (National Health Insurance Scheme)
 Free drugs policy
 Cost sharing
 and DRF (user fee)
Steps and Procedures in Drug Revolving Fund
1. Selection of Drugs in DRF Scheme at all levels of health care: primary, secondary and
tertiary which include costs of drugs and dosage, drugs available for the treatment, effective
and good quality drugs
2. Procurement of Drug based on selected drugs, dosage forms and available financial
resources3.
3. Estimation of Drug and dosage forms required for a given period is undertaken to avoid
shortages (out of stock), ensure credible health care service, prevent excess stock and avoid
waste (loss or mismanagement of financial resources).
4. Determining the Quantity of Drug to be Requested5
5. Requisition, Supply and Receipts of Drugs in a DRF Scheme
6. Supply of drugs from medical stores: Stores requisition/delivery (issue) form7.
7. Receipt of drugs at dispensary
8. Dealing With Discrepancies in Receiving Drugs
9. Dealing with “Expiry Before Use” (Dexp)
10. Completing Stores Requisition/Delivery (Issue) Form
11. Transfer Voucher or Internal Drug Return (IDR) Form
12. Procedure for supply drugs to health care wards and outpatient clinics
13. Drug Distribution
14. Storage of Drugs, Stock Management and Drug Use
15. Drug Stock Management Support Tools
16. Consumption records at the dispensary level
17. Dealing with Discrepancies
18. Daily use/cash record
19. Financial Record Book The total daily cash from the column “CASH RECEIVED” of a daily
use/cash record should be transferred to the financial record book (FRB) 20.
20. Custody of cash
21. Current Capital Situation Card (CCSC)
22. Monthly Return form
23. Inventory form
24. Storage of documents
25. Use of drugs rationally
26. Supervision/Inspection

Cost Recovery in PHC

21
Cost recovery is a method of accounting in which a business only records the revenue it
earns from a transaction at the time that the client has paid enough of the invoice that the
business has recouped all its costs on the transaction.

Cost recovery is the principle of recovering a business expenditure, and generally refers to
regaining the cost of any business-related expense.

For accountants, cost recovery accounting is a tax concept that refers to the recovery of an
expense, and accountants generally do this through depreciation.

What is the cost recovery method?

The cost recovery method is a way of recognizing and classifying revenue in accounting.
When using the cost recovery method, a business doesn’t record income related to the sale
of its services until the money collected from a client exceeds the cost of the services
rendered. You might also hear the cost recovery method referred to as the collection
method.

How do you calculate cost recovery?

The following steps will have you calculate cost recovery for your business revenues:

1. CALCULATE YOUR PROJECT COSTS

To calculate cost recovery, you first need to determine the costs you’re incurring to
complete a project. Do you have costs for subcontractors, equipment or software? Add all
these up to calculate your total project costs.

2. TRACK THE FLOW OF REVENUE

Whether your client sends you a lump sum payment after you’ve completed a project, or
pays in multiple instalments over a longer period of time, you’ll want to track all the
revenue flowing in to your company, along with your unrecovered costs.

3. DETERMINE YOUR PROFITS

Calculate the profits you make on the project using the cost recovery method, by
subtracting your project costs from your total revenue. All of your revenue and costs should
be recorded as business transactions.

22
 MODULE 9: ESSENTIAL DRUGS

At the end of this Lecture student should be able to:

1. Define Essential Drug.

2. Objectives of National essential drugs programme
3. List step in management of essential drugs
4. Identify the Steps for selecting essential drugs
5. Identify the Steps for ordering essential drugs
6. Identify the Steps for stocking essential drugs
7. Identify the Steps for issuing of drugs

Definition: Essential drugs are those basic drugs that satisfy the basic health needs of the
majority of the population in the community or environment which must be readily
available and affordable at all time.

Objectives of National essential drugs programme

1. To make essential drugs easily available to the entire population on continuous basis
2. To use drugs that are safe and effective
3. To reduce the cost of drugs through a central bulk purchasing system using generic
name
4. To purchase only necessary drugs for the system
5. Introduce a rational system of drug selection, calculation, procurement and use
6. Provide training for improved drug management and skills to health workers at all
level
7. Discourage the production, marketing and use of fake and counterfeit drugs.

Step In Management Of Essential Drugs

1. Selecting from the essential drugs list those drugs needed at that specific health unit

23
 2. Ordering the drugs
3. Receiving and storing the drugs
4. Issuing and using the drugs

Steps for selecting essential drugs

1. The choice of drugs must be based on the health problem common in the
community
2. Choosing the drugs adequate and sufficient to each problem by their generic names
3. Reviewing the list annually, taking account of new common problem
4. The drugs must be certified quality, which can be obtained easily from local
institution or through Wold Health Organization
5. The drugs must have NAFDAC Registration number
6. The dosage forms of drugs selected should satisfy reasonable shelf life that can
withstand adverse environmental condition.

Steps for ordering essential drugs

1. Determine the ordering interval
2. List the drugs needed
3. Calculate the amount of drugs needed within a specific ordering interval based on
locally and seasonal usage
4. Complete a drug requisition form
5. Calculate the cost of the drugs ordered
6. Forward money for drugs ordered together with requisition form

24