introduction to basic accounting at the university of ...€¦ · fund accounting at the university...

Introduction to Basic Accounting

at the University of Saskatchewan

Financial Services – Controller’s Office

Updated October, 2016

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Table of Contents A. Course Overview .............................................................................................................................. 1

Course Methodology ................................................................................................................................................. 1 Course Purpose ...................................................................................................................................................... 1

Learning Objectives ................................................................................................................................................... 1 B. Accounting Cycle .............................................................................................................................. 2

What is Accounting? .................................................................................................................................................. 2 University Accounting Cycle ...................................................................................................................................... 2

Fund Accounting at the University of Saskatchewan ............................................................................................ 2 Analysis and Recording Transactions ..................................................................................................................... 3 Financial Reporting ................................................................................................................................................ 3

University Fiscal Year ................................................................................................................................................. 4 Exercise 1 ................................................................................................................................................................... 5

C. Chart of Accounts .................................................................................................................................. 6 University of Saskatchewan Chart Elements ............................................................................................................. 6

Chart ...................................................................................................................................................................... 6 Fund ....................................................................................................................................................................... 6 Organization .......................................................................................................................................................... 7 Account .................................................................................................................................................................. 8 Program ................................................................................................................................................................. 8 Activity and Location ............................................................................................................................................. 9

Exercise 2 ................................................................................................................................................................. 10 D. Balance Sheet and Operating (Income) Statement ....................................................................... 11

Balance Sheet .......................................................................................................................................................... 11 Other Names........................................................................................................................................................ 11 Example ............................................................................................................................................................... 12 Balance Sheet Features ....................................................................................................................................... 12 Assets ................................................................................................................................................................... 13 Liabilities .............................................................................................................................................................. 14 Fund Balance ....................................................................................................................................................... 14

Operating (Income) Statement ................................................................................................................................ 15 Other Names........................................................................................................................................................ 15 Example ............................................................................................................................................................... 15 Operating Statement Features ............................................................................................................................ 16 Revenues ............................................................................................................................................................. 16 University Revenue Sources ................................................................................................................................ 17 Expenses .............................................................................................................................................................. 18 Transfers .............................................................................................................................................................. 18 Determining the Appropriate Category ............................................................................................................... 19

Connection between Balance Sheet and Operating (Income) Statement ............................................................... 20 Balance Sheet and Operating Statement Account Codes ........................................................................................ 21 Exercise 3 ................................................................................................................................................................. 22

E. Accounting Equation ........................................................................................................................... 24 Basic Accounting Equation ...................................................................................................................................... 24 Connecting to the Operating Statement ................................................................................................................. 24 Expanded Accounting Equation ............................................................................................................................... 25 Exercise 4 ................................................................................................................................................................. 26

F. Debits and Credits ............................................................................................................................... 28 Normal Balances ...................................................................................................................................................... 28 Increase/Decrease ................................................................................................................................................... 29 The Accounting Equation and Debits and Credits ................................................................................................... 30 Exercise 5 ................................................................................................................................................................. 32

G. Preparing Transactions Using Debits and Credits ......................................................................... 33 “One-Sided” Transactions ........................................................................................................................................ 33

Invoice Transactions ............................................................................................................................................ 33 Cash Deposits....................................................................................................................................................... 33

Analysis of Transactions .......................................................................................................................................... 33 Determining Accounts ............................................................................................................................................. 33 Determining a Debit or a Credit ............................................................................................................................... 34 Exercise 6 ................................................................................................................................................................. 35

H. Conclusion & Follow-up ................................................................................................................. 36 Evaluation and Follow-up ........................................................................................................................................ 36

I. Glossary ............................................................................................................................................... 37

Introduction to Basic Accounting at the University of Saskatchewan Page 1 © 2016 University of Saskatchewan, Financial Services –Controller’s Office

A. Course Overview

Course Methodology

Course Purpose This course provides an overview of accounting concepts. Through a combination of instructor-led discussion, examples, practice problems and take-away materials this course should enhance the basic understanding of accounting concepts for individuals involved in preparing accounting transactions or reviewing financial information at the University of Saskatchewan. This course provides a foundation for future internal training in accounting, financial management and financial reporting that will be delivered by the Controller’s Office.

Learning Objectives After attending this course and working through the practice exercises you should be able to:

• Describe the university accounting cycle • Recognize the university Chart of Accounts • Describe the difference between a Balance Sheet and an Operating (Income) Statement • Identify how the Balance Sheet and Operating (Income) Statement are connected • Describe how the account codes connect to the Balance Sheet and Operating (Income)

Statement • Describe how the Accounting Equation applies to financial transactions • Identify the difference between a debit and credit • Apply the appropriate use of a debit or credit in transaction analysis


B. Accounting Cycle

What is Accounting? Accounting is a system of identifying, analysing and recording economic events for the purposes of communicating this information to interested users, in order to aid in sound economic decision making. What does this mean?

• Accounting provides guidelines and structure for translating exchanges and events into transactions that can be recorded.

• Accounting is a means of recording history for financial or economic events. • The primary purpose of accounting is to communicate financial information to

individuals that have an interest in the organization. Interested users of University Financial information would include researchers, faculty, staff, Deans, Department Heads, senior administration, donors, Board of Governors, Province of Saskatchewan, funding agencies, students, potential students, Saskatchewan citizens, etc.

University Accounting Cycle

Fund Accounting at the University of Saskatchewan The university follows the restricted fund method of accounting for contributions. Under fund accounting, resources are classified for accounting and reporting purposes into funds in accordance with specified activities or objectives. The university has classified accounts with similar characteristics into Major funds as follows:

1. The General Fund is unrestricted and accounts for the university’s program delivery, service, and administrative activities. This fund is further classified as Operating and Ancillary.

The Operating Fund accounts for the university’s functions of instruction (including academic support services), administrative services, plant maintenance, and other operating activities.

The Ancillary Fund accounts for the provision of goods and services to the university community which are supplementary to the functions of instruction, research, and service; and is expected to operate on at least a break-even basis.

2. The Restricted Fund carries restrictions on the use of resources for particular defined

purposes. This fund is further classified as Capital, Research, and Student Financial Aid.

The Capital Fund accounts for the acquisition of capital assets, major renovations and improvements to capital assets.

The Research Fund accounts for activities in support of research.

The Student Financial Aid Fund accounts for activities in support of students.


3. The Endowment Fund accounts for resources received with the stipulation that the

original contribution not be spent. The fund also consists of a portion of the investment income earned on these funds that is required by donors and the university’s Board of Governors to be added to the fund to offset the eroding effect of inflation. The amount recapitalized each year will vary from year to year with variability in annual investment returns, but over time it is intended that the recapitalized amount will offset the cumulative effect of inflation.

Analysis and Recording Transactions The analysis and recording of accounting transactions takes place across the university campus. Individual units and departments record transactions through the use of journal vouchers, requisitions and PCard purchases. Some transactions occur automatically and are recorded centrally such as the payment of invoices, recording encumbrances and asset depreciation. While these transactions are automatically generated, they are recorded using the information provided by individual units and departments.

Financial Reporting The primary purpose of accounting is to facilitate communicating financial information to interested users, to assist in sound economic decision making. The university has a significant number of interested users and the information they are interested in varies. The communication of the university’s financial information takes many different forms, some of these are highlighted below.

University Annual Report (Published Financial Statements) Annually, the university produces a summary set of Financial Statements for the entire university as part of the Annual Report. These Financial Statements are audited by the office of the Provincial Auditor of Saskatchewan, and are required to be tabled in the Provincial Legislature. The Annual Report, including the Financial Statements, is widely distributed and available on the University website.

On-going Financial Reporting Financial reporting goes beyond the published Annual Report. There is on-going and periodic reporting prepared and available to individuals both within and outside the university. Every accounting transaction that is recorded plays a role in the quality, accuracy and consistency of these reports.

FAST and UniFi UniFi (the university’s financial system) and the FAST reporting tool provide up-to-date financial reporting to individuals who have been granted access to view funds. These systems provide information a range of information from summaries of for a project, down to the level of individual transactions.


Reporting to the Board and Senior Administration Reports are prepared on a summary basis for use by Senior Administration and the Board of Governors. These reports tend to be focused on providing an overview of the university, or a portion of the university.

Reporting to Funding Agencies The university receives funding from numerous organizations for a variety of purposes, including research. Many of these organizations require financial reporting that identifies how their funding was used. These reports summarize the activities of a project or activity for a specific time period.

Other Reporting The university regularly provides reports to a number of groups or organizations for a variety of purposes. Some examples or reporting that require financial information include information provided to Statistics Canada, Canada Revenue Agency returns, the United States Internal Revenue Services return and reporting to the Canadian Association of University Business Officers (CAUBO).

University Fiscal Year To facilitate the reporting of financial information, accounting segments time into manageable portions. For the purpose of reporting on accounting information, entities select a 12-month period known as a Fiscal Year to assist in reporting and analysis.

The university operates on a Fiscal Year of May 1 to April 30.


Exercise 1 For each statement, identify the choice that does not fit. 1. Accounting is …

a) a means for recording a history of financial or economic events. b) only used by university central administration. c) a communication tool to share information with interested users. d) a framework for recording financial and economic events.

2. Financial reporting information …

a) is directed to users both within and outside the university community. b) facilitates managing projects, departments and activities. c) is only available in the Annual Report. d) provides information to administrators, researchers and managers.

3. The University Fiscal Year …

a) starts with the September academic year. b) covers a 12-month period. c) breaks time into manageable portions for reporting accounting information. d) was selected by the university for use in financial reporting.


C. Chart of Accounts The chart of accounts (COA) is a means of capturing and recording economic events in a systematic manner. Every organization designs their COA to facilitate their unique needs. The structure and design of the COA is established to assist in both capturing and reporting financial information.

University of Saskatchewan Chart Elements The university uses seven different chart elements to capture financial information in the university’s financial system. The University Financial System (UniFi) uses Chart, Fund, Organization, Account, Program, Activity and Location (commonly known as CFOAPAL, usually pronounced see-fopal) to record transactions. Each of these elements helps to identify the type of transaction, to which unit is relates, and other detailed information. The CFOAPAL elements are built using hierarchies that allow the transactions to be grouped, summarized and reported at different levels. For example, transactions may be recorded for a specific faculty member, but the hierarchy allows that information to be rolled up to the department level, the college level or for the entire university.

Chart What is the Chart Code?

The Chart element of the CFOAPAL is used to identify whether the transaction is activity of the University of Saskatchewan or activity of a non-University of Saskatchewan entity.

Why is it important? The chart is important to ensure that University of Saskatchewan activity can be separated from non-university activity. The university provides accounting services to a number of non-university entities such as CLS Inc. the University Club and Prairie Diagnostic Services, and it is important that these activities are maintained separately.

How is it used? Along with the Fund, Organization, Account and Program, Chart is a required element of the CFOAPAL on every transaction. The chart is a one digit code. The chart code is 1 for all University of Saskatchewan transactions and all university accounts receivable billings. A chart is 2 will be used for all non-university activity (including university subsidiaries such as CLS Inc.)

Fund What is the Fund Code?

The Fund element of the CFOAPAL is used to capture financial information including assets, liabilities, fund balance, revenues and expenditures for a discrete project or specific funding source at the university.

C F O A P A L

C F O A P A L


C F O A P A L

Why is it important? The use of the Fund code ensures transactions are recorded against the appropriate source of funding. The Fund code is also used to apply security access to view information in UniFi.

How is it used? Along with the Chart, Organization, Program and Account, Fund is a required element of the CFOAPAL on every transaction. The first digit of the fund code identifies where the fund falls in the university’s institutional reporting structure. The table below identifies the relationship of the first digit and the type of activity.

First Digit Fund Category1 Operating Fund2 Ancillary Fund3 Student Financial Aid Fund4 Research Fund6 Endowment Fund8 Capital Fund

Organization What is the Organization Code?

The Organization element of the CFOAPAL is used to identify the university unit to which a transaction relates. The organization element consists of a hierarchy of university units, with only the lowest level being used on transactions. Organization codes have been assigned to units where there is a clear budgetary responsibility in the management of that unit.

Why is it important? The organization code is important to ensure that transactions are attributed to the appropriate department, unit or division within the university. The organization code will also be used in preparing university financial reporting by college and department. UniFi uses Organization as part of the security to provide access to information.

How is it used? Along with the Chart, Fund, Account and Program, Organization is a required element of the CFOAPAL string on every transaction. The four-digit code is assigned to all revenue and expenditure transactions. Transactions can only be recorded using‘1000 level’ organization codes that begin with a one. Inquiry and reporting of financial information can be performed at any level within the hierarchy.


C F O A P A L

C F O A P A L

Account What is the Account Code?

The Account element of the CFOAPAL is used to identify the nature of the transaction. The account identifies whether the transaction is a Balance Sheet transaction (an asset or liability) or an Operating Statement transaction (revenue, expense or transfer.) The account code is composed of a hierarchy, however only the five-digit account codes can be used on transactions.

Why is it important? The account code is important for institutional reporting, reporting to funding agencies, as well as for managing projects and departments. The account code is also important for a number of university processes and policies, such as the purchase of fixed or capital assets, identifying travel destinations and recording the breakdown of salaries paid.

How is it used? Along with the Chart, Fund, Organization and Program, Account is a required element of the CFOAPAL string on every transaction. The appropriate account code can be determined based on the listing and descriptions available on the Financial Services website. These account codes are valid for use in all funds in both Chart 1 and Chart 2.

Program What is the Program Code?

The Program element of the CFOAPAL is used to capture information on major areas of institutional activity. The program code consists of a hierarchy, however only the four-digit codes can be used on transactions.

Why is it important? The program is an important element used to capture and report institutional information. This element is used for reporting to groups such as the Canadian Association of University Business Officers (CAUBO), Canada Revenue Agency (CRA), Statistics Canada and other external sources.

How is it used? Along with the Chart, Fund, Organization and Account, Program is a required element of the CFOAPAL string on every transaction. The program can be determined by considering the fund to which the transaction will be recorded and the nature of the activity being recorded.


C F O A P A LActivity and Location What are the Activity and Location Codes?

The Activity and Location elements of the CFOAPAL are used to identify unit specific information about a transaction in UniFi. The activity code allows unique codes to be created to aid a department or unit in tracking information that is not captured in another element. The location code allows the ability to attach a building location to a transaction.

Why are they important? The activity element can be an important element in tracking department or unit-specific information about transactions. This provides the ability to identify transactions related to a particular individual, a specific project or other information important to the management of the unit. The location element can be included to assist in tracking where the purchase of a piece of equipment may end up, or to identify a transaction with a specific location, such as a lab or office.

How are they used? Activity and Location are optional and not required on transactions. The activity code can be used on all transactions. The location code cannot be used on payroll transactions.


Exercise 2 1. Fill in the Blank

a) A Chart of Accounts facilitates the systematic __________________ and ________________ of economic events.

b) The _____________________ chart element is used to record transactions to the appropriate source of funding.

c) Security access to view financial information is driven by the _______________ and _______________ chart elements.

d) The optional chart elements __________________ and __________________ are provided to allow additional information to be captured about a transaction.

2. For each statement, identify the University Chart of Accounts element that best fits.

a) Identifies the project to which the transaction is recorded. b) Identifies the nature of the item purchased or money received. c) Identifies the department or unit to which the transaction relates. d) Identifies the nature of the activity (such as teaching, research, etc.)

3. Match the Fund number with the Fund Category:

a) 600014 1) Operating Fund b) 200111 2) Ancillary Fund c) 400001 3) Student Financial Aid Fund d) 101100 4) Research Fund e) 800001 5) Endowment Fund f) 300014 6) Capital Fund


D. Balance Sheet and Operating (Income) Statement The Chart of Accounts is important for recording transactions correctly and attributing the activity into appropriate categories. When preparing financial statements, the Account code will determine on which financial statement the activity is reflected. Most sets of Financial Statements for organizations include four different statements: Balance Sheet, Operating (Income) Statement, Cash Flow Statement and Statement of Changes in Equity. In this course we focus on two of these statements, the Balance Sheet and the Operating or Income Statement. The two financial statements most commonly used and referred to are the Balance Sheet and Operating Statement. These two statements provide summarized views of the financial activities from different perspectives. For individuals involved in the day-to-day management of the activities of a project, unit or department, these statements will provide the greatest assistance. The Balance Sheet shows a snapshot of the financial position at a specific point in time, while the Operating Statement shows the activity over a specific period of time.

Balance Sheet A Balance Sheet is a financial statement that captures an organization’s financial position at a point in time. A typical Balance Sheet provides a summary of an organization’s Assets, Liabilities and Equity. In the university environment we substitute Fund Balance for Equity, since the university operates as a Not-for-Profit Organization.

Other Names The Balance Sheet is also be referred to by other names. Regardless of the name used, these refer to the same statement:

• Statement of Financial Position • In the FAST reporting tool: Balance Sheet


Example

College of ________________Balance Sheet

as at January 31, 20xx

AssetCash and cash equivalents 100,000$ Accounts Receivable 7,500 Inventories 10,000 Capital Assets 300,000 Total Assets 417,500$

LiabilitiesAccounts Payable 5,000$ Loans Payable 20,000

Fund BalanceUnrestricted 392,500

Total Liabilities and Fund Balance 417,500$

Balance Sheet Features When looking at a Balance Sheet you can expect to see some standard features. For informal statements that are used for management purposes (such as reports generated from the university’s financial system) all of these features may not be present, but similar information should be available. The features noted below are in addition to the normal categories of financial activity presented on the statement.

• Organization: The name of the organization for which the statement has been prepared is indicated at the top of the page, usually as part of the statement header.

• Statement: The second line of the header indicates the type of financial statement, in this case a Balance Sheet.

• Date: The date for which the Balance Sheet is prepared. The Balance Sheet reflects the financial position only at that point in time.

• Segment: If the financial statement is restricted to a specific portion of the organization this is indicated on the statement.


• Totals: Balance sheets are divided into two sections that are totalled. As the name suggests the two totals must be the same, indicating the statement is “in balance.” Assets are presented as the first section. Liabilities and Fund Balance are totalled and presented as the second section.

Assets In simplest terms, Assets are items of economic value held by or due to the organization as the result of a past transaction, that are expected to yield a benefit to the organization in future periods, and that can be measured with reliability. Assets include a wide range of items that have economic value to the organization:

• Cash and short-term investments • Accounts Receivable (Amounts owing from customers that are expected to be paid in

the future) • Inventory (Items purchased or built in the past that are expected to result in future

revenue) • Capital Assets (Normally physical items owned, such as building and equipment that

provide the means to generate revenue and operate the organization) • Investments (Negotiable instruments held by the organization with an expectation that

they will generate interest or investment returns while held and a possible gain when sold.)

For most assets, accounting guidelines require that they are recorded at the amount paid for those assets. Exceptions to this norm are investments, which are commonly reflected at the current market value. Most university departments and units do not regularly deal with recording or monitoring assets. The most common assets reviewed by university departments and units are noted below:

• Accounts Receivable - For projects that require invoicing to external funding agencies, issuing the invoice creates an amount owing to the university. Researchers and managers of projects may want to monitor Accounts Receivable when wanting to know whether the payment of an invoice has been received. Accounts Receivable are also created when units sell goods and services to customers, allowing them to pay at a later date. By extending credit to customers, an amount owing to the university is created. Accounts Receivable must be monitored to ensure timely payment.

• Inventory - The purchase or creation of items for resale are recorded on the Balance Sheet as Inventory. Since these items reflect an economic resource that will provide future benefit, they are recorded as an asset until they are sold to the customer. All inventories must be counted at least annually to ensure that adjustments are made to reflect the correct value of the assets held. Many university units record inventory purchases as an expense under Purchases for Resale and make an annual adjustment to record the Inventory amount.


• Investments - Many departments and colleges deal with trusts and endowments provided to fund research, scholarships, awards and other projects. The investments held as part of the trust or endowment will be displayed on the Balance Sheet.

• Capital Assets - Departments and units do not purchase directly against capital assets, instead they record these purchases as an expense. As part of the university’s year end reporting, these items are adjusted and recorded as Capital Assets.

Liabilities In simplest terms Liabilities are amounts that are owed to another party. Liabilities are generally obligations that exist as a result of past events that will require an outflow of resources in the future. Liabilities include several items that are expected to require settlement in the future:

• Accounts Payable - This identifies the amounts that are due to suppliers of goods and services purchased by the university. These are established when an invoice from the supplier or a request for reimbursement from a department or unit are entered in UniFi.

• Taxes Payable - All taxes that are collected must be remitted to the appropriate government agencies. This records the amount due to those agencies. Some departments and units record transactions to Taxes Payable accounts when selling goods and services that require the application of provincial or federal sales taxes.

• Debt - This reflects the amount outstanding resulting from mortgages, loans and other debt instruments.

Most university departments and units do not deal directly with Liabilities on the Balance Sheet. Most of the Liabilities for the institution are managed by administrative units.

Fund Balance In simplest terms the Fund Balance reflects the unused resources of the fund or group of funds. Fund Balances are held within individual funds and reflect the net surplus or deficit that results from subtracting total Liabilities from total Assets. While each fund has its own Fund Balance, funds can be grouped together to provide a Fund Balance for the University as a whole or for segments of the university’s operations. The Fund Balance in the university financial system is broken into two components: the current year activity and the fund balance at the beginning of the fiscal year. Adding these two components together gives the total Fund Balance. It is important to notice the other Balance Sheet items that exist when reviewing the Fund Balance for a project. If Accounts Receivable is present on the Balance Sheet, this reflects a portion of the Fund Balance that has not yet been collected. If the Balance Sheet includes investments, these represent a portion of the Fund Balance that may not be available to spend immediately.


Operating (Income) Statement An Operating or Income Statement is a financial statement that summarizes the operations or activities of a project, department or unit over a defined period of time. A typical Operating Statement provides a summary of the Revenues and Expenses that have been incurred during the time period. The university uses Fund Accounting, which adds an additional category of activity to the Income Statement: Interfund Transfers. In preparing the university’s annual financial statements, the Operating (Income) Statement and Statement of Changes in Equity are combined to present a single Statement of Operations and Changes in Fund Balances that adds the current year revenue, expense and interfund transfer activity to the opening balances.

Other Names The Operating (Income) Statement can also be referred to by other names. Regardless of the name used, they refer to the same statement:

• Statement of Operations • Profit or Loss Statement • Statement of Receipts and Expenditures • In the FAST reporting tool: Operating Statement

Note: When using FAST, the Research/Project Statement option provides an Operating Statement for a longer period of time.

Example

RevenuesSales 100,000$ Interest Income 7,500 Total Assets 100,950$

ExpensesCost of Goods Sold 17,000$ Salaries 50,000 Materials and Supplies 20,000 Travel 5,000

92,000 Net Revenue 417,500$

College of ________________Operating Statement

for the month ended January 31, 20XX


Operating Statement Features When looking at an Operating Statement you can expect to see some standard features. For informal statements that are used for management purposes (such as reports generated from the University Financial System, (UniFi) all of these features may not be present, but similar information should be available. The features noted below are in addition to the normal categories of financial activity presented on the statement.

• Organization: The name of the organization for which the statement has been prepared is displayed at the top of the page, usually as part of the statement header.

• Statement: The second line of the header indicates the type of financial statement, in this case an Income Statement.

• Date Range: The time period for which the Income Statement is prepared is the third line of a header. The time period may be for a specific month, for a year or for any other time period indicated.

• Segment: If the financial statement is restricted to a specific portion of the organization this is indicated on the statement.

• Total: The statement should include a total reflecting the amount of revenue (income) less the expenses adjusted for any transfers.

Revenues In simplest terms, Revenues are inflows of resources into the organization. Revenue Recognition at the University of Saskatchewan Restricted contributions related to general operations are recognized as revenue of the General Fund in the year in which the related expenses are incurred. All other restricted contributions are recognized as revenue of the appropriate restricted fund when received or receivable, if the amount to be received can be reasonably estimated and collection is reasonably assured. Restricted grants subject to an external annual appropriation process will be recognized as revenue in accordance with the funder’s appropriation period. Contracts are recorded as revenue as the service or contract activity is performed, provided that at the time of performance ultimate collection is reasonably assured. If payment is not received at the time the service or contract activity is performed, accounts receivable will be recorded. Student fees are recognized as revenue in the year that the applicable course and seminars are held. Sales of services and products are recognized at the time of sale (product delivery) or when the service has been provided. Unrestricted contributions are recorded as revenue in the period received or receivable, if collection is reasonably assured. Gifts-in-kind are recorded at their fair value on the date of receipt or at nominal value when fair value cannot be reasonably determined. Pledges from fund


raising and other donations are not recorded until the year of receipt of cash or other assets due to the uncertainty surrounding collection. Contributions for endowment purposes are recognized as revenue in the Endowment Fund. Investment returns are recorded as revenue when reasonable assurance exists regarding measurement and collectability. Unrestricted investment income is recognized as revenue of the General Fund. Investment income earned on Endowment Fund resources is recorded in the appropriate Fund according to the restrictions mandated. Real estate, royalty, and miscellaneous income, as follows, are recorded when received or receivable, if the amount to be received can be reasonably estimated and collection is reasonably assured:

• Unrestricted income is recorded in the General Fund. • Restricted income is recognized as revenue of the appropriate Restricted Fund.

University Revenue Sources Revenues are resources received from an external source in exchange for goods and services or funding provided for a specific program or activity. Specific criteria are defined in accounting guidelines that define when revenue should be recognized and recorded. Normally revenue is recorded based on the following guidelines:

• When goods or services have been provided and payment has been received or is reasonably assured and measurable.

• In the case of grants and contracts, as the service or contract activity is performed, provided that at the time of performance ultimate collection is reasonably assured; or when written notice has been received of the amount of the upcoming year’s funding. If payment is not received at the time that the service or contract activity is performed, accounts receivable will be recorded.

Common Revenue sources at the University of Saskatchewan:

• Operating and capital funding from the Government of Saskatchewan • Student fees and tuition • Grant and contract funding for projects • Donations and contributions • Investment Income • Sales of services and products

Items that are not considered Revenue:

• Sales to other University of Saskatchewan departments or units (these are recorded by the university as negative expenses)


• Refunds or rebates received on purchased goods (these are recorded as negative expenses reducing the original expense)

• Reimbursements for payments made in error (these are recorded against the original expense to bring it to zero.)

Expenses In simplest terms, Expenses are outflows of resources out of the organization. Expenses are resources that are paid or committed in exchange for goods or services. Normally expenses are recorded based on the following guidelines:

• When the commitment to exchange goods and services has been made, and the goods have been transferred or the services provided.

• When inventory is purchased, this is not normally considered an expense. For purposes of managing on-going operations, many units record purchases of inventory as Goods for Resale expenditure. This expense is adjusted at year end to record any remaining inventory.

• At the university, expenses are also used to capture sales of goods and services between university units and departments. A special set of account codes record the amount received by the seller as a negative expense. The purchaser records the expense the same as if it is purchased outside the university. For the university’s published Financial Statements, the internal buying and selling is restated to be reflected as transfers. This is required by accounting standards to ensure that expenses are only recorded once. For example, when a widget is purchased by one of the campus stores to sell to another department, the cost to the university is the original purchase of the widget, and not the subsequent sale to the department.

Transfers Transfers are distributions of resources between different funds within the university. Within the university, it is quite common that units or departments provide funding to specific projects or activities. Since this is an internal transfer of resources at the university, they cannot be recorded as revenues or expenses. Instead these transactions are recorded as transfers between the two funds. Transfers may increase or decrease the net revenue or expense balance depending on the nature of the transfer. A transfer out of a project is recorded like an expense (and reduces balance available). A transfer into a project is recorded like a revenue (and increases the balance available.) For the university’s reporting, these transfers are reported on the Income Statement. Since the transfers take place within the university, the total of all transfers at the university must equal zero.


Determining the Appropriate Category With some transactions, it can be difficult to determine where they should be recorded on the Operating Statement. To provide guidance, some of those circumstances have been noted below.

• Non-University expenses. Circumstances occasionally arise where an expenditure is incurred and recorded as a university expense, even if it is truly not a university cost. An example of this is where an individual incurs a personal cost that is recorded in the University records (such as a PCard purchase or long-distance personal call.) While it is important to ensure that university Policies and Guidelines are followed in addressing these situations, it is also important to properly record these transactions. Any reimbursement received for non-university transactions, should be recorded as a negative expense against the same CFOAPAL as the original transaction. Payments received from individuals for this purpose should not be recorded as revenue.

• Reimbursement from Funding Agencies. In some situations, an outside agency will provide reimbursement of expenditures paid by the university. This commonly occurs when the agency wants to fund a researcher or other individual’s travel to attend a conference or meeting. In these circumstances, the costs should be recorded as an expenditure, and the reimbursement received should be recorded as Grant and Contract Revenue.

• Taxes. Taxes provide a few areas of confusion, both on the collection of taxes and the payment of taxes.

o Collecting Taxes. Taxes that are collected by units that sell goods or services are not recorded as revenue nor expenses. These are instead recorded as a liability that the university must then pay to the appropriate government agency.

o Paying Taxes. Taxes are included as an expenditure when purchasing goods and services. Where there is a tax rebate recovered for a part of this tax expense, the rebate should be recorded as a reduction of the original expense.

• Transfers. Often there is confusion around the difference between transfers and moving expenditures. Transfers should be used only when funding is being provided from one university source to another university source. Normally transfers cannot take place from a restricted source of funding (such as scholarships or research) to a different group of funds. Expenditure transfers should take place whenever the goal is to move an expense or to clean-up an overspent fund.


Connection between Balance Sheet and Operating (Income) Statement The Balance Sheet and Operating Statement provide two different views of the Financial Activity of an organization. Each statement is used for different purposes when managing or overseeing financial information. While the purposes and information provided in the statements are different, the statements are closely linked. When transactions is recorded that affects the Operating Statement, the impact is also seen on the Balance Sheet. The Operating Statement “Net Revenues or Expenses” is reflected in the Fund Balance on the Balance Sheet. Every transaction that changes the Net Revenue or Expenses also changes the Balance Sheet. This connection is important in determining the appropriate recording of financial transactions. The important thing to remember is that the Fund Balance consists of the Beginning Fund Balance + Revenues - Expenses - Transfers to come up with the current Fund Balance. Therefore any changes in Revenues, Expenses and Transfers show up on the Balance Sheet.

Current Fund Balance =Beginning Fund

Balance+ Revenues - Expenses - Transfers

Current Fund Balance = $6,000 + $0 - $500 - $0 Current Fund Balance = $5,500

Chandra orders office supplies costing $500. The accounting entry that records this transaction will include an Expense under Office Supplies for $500. If there was a fund balance of $6,000 before Chandra bought the supplies, what impact does this order have on the Fund Balance?When the expense of $500 is recorded, it reduces the fund balance.

On the Balance Sheet you will see the Fund Balance become $5,500. On the Income Statement you will see an increase of the Expenses by $500. While there are other components of this transaction that we will not examine right now, this illustrates the connection between the Balance Sheet and Income Statement.


Balance Sheet and Operating Statement Account Codes As mentioned earlier, the Account Code structure in the University Financial System was structured to parallel the Balance Sheet and Operating Statement formats. This connection assists in determining the appropriate account code to use depending on the transaction that is being recorded. The table below provides a summary of the account code numbering and how it connects to the two Financial Statements discussed.

Account Code Financial

Statement Financial Statement Line

10000 to 19999 Assets

20000 to 29999 Liabilities

30000 to 39999 Fund Balances (Net Revenues and Expenses for the current year)

40000 to 49999 fund Balance (Balance at the beginning of the year)

50000 to 59999 Revenues

60000 to 69999 Expenses (Salary & Benefits)

70000 to 79999 Expenses (Non-salary)

80000 to 89999 Transfer

Balance Sheet

Operating Statement


Exercise 3 1. For each account below, identify which statement it belongs to (Balance Sheet or

Operating Statement) and which account category it belongs to (Assets, Liabilities, Fund Balance, Revenues, Expenses or Transfers). (Hint: If you are uncertain, look in the FAST reporting tool to determine where the line falls)

Account Statement Category a) Materials & Supplies b) Cash c) Government Grants d) Salaries e) Inventory f) Accounts Payable g) Sales to University Units h) Equipment Purchases i) Investments

j) External Sales of Services

For the questions below, select the best answer: 2. The Balance Sheet contains the following elements:

a) Assets, Liabilities and Revenues. b) Assets, Fund Balance and Expenses. c) Fund Balance, Assets and Liabilities. d) Revenues, Expenses and Transfers.

3. The Operating Statement contains the following categories:

a) Revenues, Expenses and Transfers. b) Assets, Liabilities and Fund Balance. c) Revenues, Transfers and Fund Balance. d) Expenses, Liabilities and Revenues.


4. All of the following account codes are Expenses except: a) 60001 b) 78001 c) 70001 d) 50001

5. What impact will an Expense (Operating Statement) of $5,000 have on the Fund Balance

(Balance Sheet)? a) Increase the Fund Balance by $5,000. b) Decrease the Fund Balance by $5,000. c) No Change to the Fund Balance.

6. What impact will receiving $2,000 of Revenue (Operating Statement) have on the Fund

Balance (Balance Sheet)? a) Increase the Fund Balance by $2,000. b) Decrease the Fund Balance by $2,000. c) No Change to the Fund Balance.

7. What impact will transferring (Operating Statement) $8,000 from your project to another project have on your project’s Fund Balance (Balance Sheet)?

a) Increase the Fund Balance by $8,000. b) Decrease the Fund Balance by $8,000. c) No Change to the Fund Balance.


E. Accounting Equation The recording of accounting transactions is based on a basic formula that accountants refer to as the Accounting Equation. This equation can be used in analysing transactions and determining the appropriate method to record the transaction.

Basic Accounting Equation The Accounting Equation is tied directly to the presentation and structure of the Balance Sheet. It is based in the fact that every transaction must keep this equation in-balance. In traditional Financial Accounting this equation is presented in a manner that mirrors the Balance Sheet:

Assets = Liabilities + Equity

Equity refers to the investment of the owners or shareholders that exists in for-profit organizations. Since this concept of equity does not apply to a not-for-profit organization, we substitute Fund Balance for Equity to arrive at the following equation:

Assets = Liabilities + Fund Balance

Any transaction that is recorded must keep this equation in balance. This means that an increase to an Asset, must be accompanied by one (or a combination of the following):

• An equal decrease in another Asset • An equal increase in a Liability • An equal increase in the Fund Balance

Assets = Liabilities + Fund Balance$4,000 Cash - $4,000 Accounts Receivable $0 + $0

Assets = Liabilities + Fund Balance$5,000 Cash $5,000 Liabilities + $0

George receives a $4,000 payment on a customer's Accounts Receivable.

George pays $5,000 to a supplier for an outstanding bill.

This equation does not specifically address how Income Statement elements (Revenues, Expenses and Transfers) are included.

Connecting to the Operating Statement As noted earlier, the Operating Statement includes activities recorded as Revenues, Expenses and Transfers. The net revenue or expense is also reflected on the Balance Sheet as part of the Fund Balance. Together these identify how the Revenues, Expenses and Transfers are brought into the Accounting Equation.


Net Revenue or Expense is calculated by subtracting total Expenses and Transfers from total Revenue. This can be represented by the following formula:

Net Revenue or Expense = Revenues - Expenses – Transfers

The Net Revenue or Expense is reflected in the Fund Balance by adding the current period Net Revenue or Expense to the beginning Fund Balance. This facilitates the inclusion of the Income Statement Activity in the Accounting Equation.

Fund Balance = Beginning Fund Balance + Current Period Net Revenue or Expense

Fund Balance = Beginning Fund Balance + Revenues - Expenses - Transfers

Expanded Accounting Equation We have now seen how the Accounting Equation and the Operating Statement are related through the Fund Balance. These two equations can be combined to create an Expanded Accounting Equation that can be used to help analyze transactions.


Fund Balance = Beginning Fund Balance + Revenues - Expenses - Transfers

Assets = Liabilities + Beginning Fund Balance + Revenues - Expenses - Transfers

As noted before, this formula must always remain balanced, so any transaction that takes place must maintain this balanced situation. This expanded Accounting Equation allows us to apply this concept to a wider range of transactions and can assist in determining the appropriate use of Debits and Credits.

Assets = Liabilities + Beginning Fund Balance + Revenues - Expenses - Transfers$50 Cash = $0 + $0 + $0 - $750 Office Supplies - $0

Assets = Liabilities + Beginning Fund Balance + Revenues - Expenses - Transfers$100 Cash = $0 + $0 + $100 Sales - $0 - $0

George buys $750 of copier paper from an office supply company with cash.

George receives $100 in cash for services he provided to a client.


Exercise 4 1. Complete the boxes below for the equations discussed in this section.

= Liabilities +

Net Revenues or Expenses = − −

Fund Balance = +

Fund Balance = + Revenue

s − −

= Liabilities + + Revenue

s − −

2. For each situation described below, complete the chart representing the long form of

the equation. (Ensure that the equation balances. No changes will occur to the Beginning Fund Balance)

a) Bob sells $500 of products to a customer outside the university. b) Bob sells $250 of products to another university department. c) Bob buys $2,000 worth of office supplies from an outside supplier that will be

paid at a later date. d) Bob buys $1,000 worth of services from another university department. e) Employees are paid $15,000 in salaries for the month of June. f) A cheque for $2,000 is issued to the supplier that Bob purchased the office

supplies from. g) Bob’s department receives a $500,000 donation from a supporter. h) Bob’s department transfers $750 to another department to help fund a

conference.


Assets = Liabilities

Beginning Fund

Balance Revenues Expenses Transfers

a) +500 = 0 +500 0 0

b) =

c) =

d) =

e) =

f) =

g) =

h) =


F. Debits and Credits Debits and Credits are often a major source of confusion for non-accountants. The simplest explanation of debits and credits is that they are used as a notation when preparing transactions. There is no value interpretation that can be placed on Debits and Credits saying one is “good” and the other is “bad” or indicating that one is a “positive” and the other is a “negative.” Instead it is important to understand or eventually memorize how this notation is used by accountants.

Normal Balances One means of explaining Debits and Credits is to examine the Balance Sheet and Income Statements components and identify the Debit or Credit notation that would normally be assigned to these items on the statement.

Debit or Credit

Asset Assets normally have a Debit balance

Liability Liabilities normally have a Credit balance

Fund Balance A positive Fund Balance is a Credit

Revenue Revenues are normally a Credit

Expense Expenses are normally a Debit

Transfer Transfers out of a fund are a Debit

Statement Component

Balance Sheet

Operating Statement

You will notice that the signs used are consistent with the underlying use of the Accounting Equation. Assets = Liabilities + Fund Balance, could be represented as Debits = Credits. Not only does our accounting equation need to balance, but we also want to ensure our Debits and Credits Balance.


Increase/Decrease Another means of determining the appropriate use of Debits and Credits is by determining whether a Debit or Credit increases or decreases the line item of the financial statement. The table below summarizes whether a debit or credit increases or decreases each Statement line. This can be used as a quick reference to evaluate the appropriate sign to use on a transaction. Note that Transfers behave somewhat uniquely.

This table provides a system for determining debits and credits. You need to determine which group on the statement you want to impact, then determine whether you want to increase or decrease it. For example, if you want to record an expense (increase an expense) you must use a debit. If you want to record a revenue (increase a revenue) you must use a credit. Since you know that your debits and credits must be equal, often you only need to determine which sign to use on one side of the transaction, and by default you will know what sign to use on the other part of the transaction. A Note on Transfers Transfers can generally be understood as a transaction to provide funding from one university source to another. With this in mind, when a transfer is recorded the destination of the funding (unit receiving the funding) uses a credit and the source of the funding (unit providing the funding) uses a debit.

Increase DecreaseAsset Debit Credit

Liability Credit Debit

Fund Balance Credit Debit

Revenue Credit Debit

Expense Debit Credit

Transfer Transfer out - Debit Transfer in - Credit

Statement Component

Balance Sheet

Operating Statement


The Accounting Equation and Debits and Credits The Accounting equation can be used to help explain the logic behind when to use a debit and a credit. We will use what we have learned to this point to help put these two pieces together. As a reminder, the basic accounting equation says:


We learned that an increase to an Asset is a Debit and an increase to a Liability or Fund Balance is a Credit. If we think only about which sign increases the Balance Sheet equation we can illustrate it like this:


Debit Credit + Credit

We can see if we increase an Asset with a Debit we will need to offset that, perhaps with an increase to a Liability with a Credit. This keeps our accounting equation in balance and our Debits and Credits in Balance. Our previous example, with debits and credits:

Cash increased by $4,000 and Accounts Receivable decreased by $4,000. Assets = Liabilities + Fund Balance$4,000 Debit - $4,000 Credit $0 + $0 (Cash) (Accounts Receivable)

Assets = Liabilities + Fund Balance $5,000 Credit (Cash) $5,000 Debit (Liabilities) + $0

Cash decreased by $5,000 and Accounts Payable decreased by $5,000.

George receives a $4,000 payment on a customer's Accounts Receivable.When the expense of $500 is recorded, it reduces the fund balance.

George pays $5,000 to a supplier for an outstanding bill.

We can take this a step further to include the Operating Statement components as well. As we noted above, an increase to the Fund Balance is a Credit. We can use this to apply a similar analysis to our Income Statement, by further breaking down the Fund Balance.

Fund Balance = Beginning Fund Balance + Revenues - Expenses – Transfers

We know that an increase to the Fund Balance is a Credit and we also know that Revenue increases the fund balance, therefore we can deduce that an increase to a Revenue is also a Credit.


We can determine whether an Operating Statement item is a Debit or Credit by evaluating whether it increases or decreases the Fund Balance. If the Operating Statement item increases the Fund Balance, it is a Credit, if it decreases the Fund Balance, it is a Debit. Assets = Liabilities + Beginning Fund

Balance + Revenues - Expenses - Transfers

Debit Credit + Credit Credit Debit Debit (Transfer out)

Credit (Transfer in)

Our previous example, with debits and credits:

Assets = Liabilities + Beginning Fund Balance + Revenues - Expenses - Transfers$50 Credit = $0 + $0 + $0 - $750 Debit - $0

(Cash) (Office Supplies)

Assets = Liabilities + Beginning Fund Balance + Revenues - Expenses - Transfers$100 Debit = $0 + $0 + $100 Credit - $0 - $0

(Cash) (Sales Revenue)

George buys $750 of copier paper from an office supply company with cash.Cash decreased by $750 and Office Supply expense increased by $750.

George receives $100 in cash for services he provided to a client.Cash increased by $100 and Sales Revenue increased by $100


Exercise 5 1. For each item below indicate whether the Account would normally have a debit or

credit balance.

a) Accounts Receivable

b) Accounts Payable

c) Office Supplies (Expense)

d) Donations (Revenue)

e) Vehicle Rental

f) Sales (to another department)

g) Investments

h) Travel

i) Government Grants

j) Transfers (in)

k) Cash

l) Taxes Payable


G. Preparing Transactions Using Debits and Credits Confusion around the use of Debits and Credits is most common around the preparation of transactions. Analysis of the transaction can assist in determining the appropriate use of debits, credits and account codes.

“One-Sided” Transactions All of the discussions to this point have focused on the accounting concepts underlying accounting transactions. We have talked about balancing the accounting equation and ensuring that it remains in balance and Debits equal Credits. The concept of balancing transactions will always apply to Journal Vouchers (JVs) that are prepared. However, there are a number of transactions that are processed at the university that only require recording one side of the accounting transaction. In these situations the other side of the transaction happens automatically in the system.

Invoice Transactions Invoice transactions include purchase orders, purchasing card charges (MasterCard), cheque requisitions, travel claims and expense claims. These transactions only require one side of the transaction and are usually Expenses. The system will handle recording the appropriate transaction for the other side of the entry. Normally the other side of the transaction will initially be Accounts Payable. When a cheque has been issued another transaction will take place to eliminate Accounts Payable and to reduce Cash.

Cash Deposits When cash is deposited at the university only one side of the transaction is required and is usually recorded as Revenue or Accounts Receivable. The system looks after recording the increase to Cash.

Analysis of Transactions The first step in preparing an accounting entry is to perform an analysis of the transaction that took place. The analysis should begin to determine how the Operating Statement and Balance Sheet are impacted by the transaction. By determining the impact on the two financial statements, it is easier to determine the appropriate account codes to use. Once the account codes have been determined, the analysis can proceed to assign the appropriate debit and credit signs to the transaction.

Determining Accounts The first step in analysing a transaction is to assess the impact on the financial statements. Most of the transactions prepared in university units focus on the Operating Statement. The situations that impact the Balance Sheet are usually focused around the use of Accounts Receivable or are used by units that sell goods and services. Questions to ask when determining the account codes for common transactions:


• Does this impact an expense? o If an expense is impacted, you will focus your attention on the account codes in

the 60000 - 77999 range, which record salaries, benefits and other non-salary expenses.

• Does this impact revenue received from an entity that is not part of the university? o If a revenue from outside of the university is involved, then the account code will

be in the 50000 - 59999 account code rage. • Does this impact revenue received from another university unit, through the sale of a

good or service? o When goods and services are sold to another university unit, the amount

received in exchange should be recorded in the 78000-78999 range of account codes.

• Is this recording a transfer of funding for an award, grant or project between two university units?

o To record a transfer of funding between two university units, the account codes in the 80000 - 89999 range are used.

When the appropriate account codes have been determined for a transaction, it is easy to determine the correct use of the debit and credit.

Determining a Debit or a Credit Once the analysis of a transaction has determined the appropriate account codes to use, this information can be used to determine whether a debit or credit is appropriate. The table below (previously shown on page 29) will help guide the determination of when to use a debit or credit.

Increase DecreaseAsset Debit Credit

Liability Credit Debit

Fund Balance Credit Debit

Revenue Credit Debit

Expense Debit Credit

Transfer Transfer out - Debit Transfer in - Credit

Statement Component

Balance Sheet

Operating Statement


Exercise 6 1. For each situation below, record the impact of the transaction by showing the account

code that would be used and the related debit(s) and credit(s). (For assistance with determining account codes, visit the Financial Services website.)

a) Jane has a research project to which she has recorded travel to Montreal. She has now determined that she would like to charge $1,000 of the travel to another project.

b) Sue provided some laboratory analysis services costing $800 to a research project being conducted by a colleague in her department.

c) Bob’s department has agreed to transfer $250 to Sue’s department to help fund a conference Sue’s department is putting on.

d) Lynne purchased $600 of laboratory supplies from an external supplier. The supplier will be paid at a later date. (Assume the other side of this “one-sided” transaction is Accounts Payable account 20001.)

e) Gerry’s office received a cheque providing a Government of Canada grant of $50,000 toward a research project. (Assume the other side of this “one-sided” transaction is Cash account 10001.)

f) After depositing the cheque, Gerry realized she deposited it to the wrong project, and now has to move it to the correct project.

Account Description Debit Credit

a)

b)

c)

d)

e)

f)


H. Conclusion & Follow-up This course has focused on providing a basic comprehension of the accounting concepts around the chart of accounts, balance sheet, operating (income) statement, debits and credits. Now that you have completed this course you will have a foundational knowledge to guide and direct the analysis, preparation and recording of transactions. This knowledge will also provide additional understanding required in reviewing financial information. To enhance the knowledge gained from the in-class instruction, each section of the training material contains exercises designed to help build and enhance the understanding of the information presented.

Evaluation and Follow-up To provide for continuous improvement and enhancement of the course, a structured course evaluation and follow-up are in place to get your feedback and input. Feedback will be facilitated at two different points

• Course Evaluation o At the end of the course you will be asked to rate your knowledge and comfort

with the course content. You will also be asked to provide your feedback on the course.

• Subsequent Follow-up o Two to three months after the course completion, you will be requested to

complete another quick self-assessment of your knowledge of the course material to help determine whether the content has assisted you in your daily activities.


I. Glossary Account The Account element of the CFOAPAL is used to identify the nature of the

transaction. The account identifies whether the transaction is a Balance Sheet transaction (an asset or liability) or an Income Statement transaction (revenue, expense or transfer.) The account code is composed of a hierarchy, however only the five-digit account codes can be used on transactions.

Accounting Accounting is a system of identifying, analysing and recording economic events for the purposes of communicating this information to interested users.

Accounting Equation

The Accounting Equation is tied directly to the presentation and structure of the Balance Sheet. It is based in the fact that every transaction must keep this equation in-balance.


Accounts Payable

Amounts that are due to suppliers of goods and services purchased by the university.

Activity The Activity element of the CFOAPAL is used to identify unit specific information about a transaction in UniFi. It allows unique codes to be created to aid a department or unit in tracking information that is not captured in another element.

Assets Assets are items of value held by or due to the organization. Assets are generally an economic resource held as a result of a past transaction that is expected to provide future benefit.

Balance Sheet A Balance Sheet is a financial statement that captures an organization’s financial position at a point in time. A typical Balance Sheet provides a summary of an organization’s Assets, Liabilities and Equity. In the university environment we substitute Fund Balance for Equity, since the university operates as a Not-for-Profit Organization.

CFOAPAL An acronym (pronounced see-fopal) used to represent the seven chart elements used to capture financial information. They reflect the first letter of each element: Chart, Fund, Organization, Account, Program, Activity and Location.

Chart The Chart element of the CFOAPAL is used to identify whether the transaction is activity of the University of Saskatchewan or activity of a non-University of Saskatchewan entity.

Credits A credit is a notation used to reflect the impact a transaction will have on a particular account.

Debits A debit is a notation used to reflect the impact a transaction will have on a


particular account.

Debt Debt is a general category of amounts owing to external creditors, usually as a result of borrowing (for example mortgages or loans.)

Expenses Expenses are outflows of resources out of the organization. Expenses are resources that are paid or committed in exchange for goods or services.

FAST FAST is the name given to the reporting tool used by the university financial system to provide online inquiry access to financial information. FAST is an acronym representing Financial Administration Support Tool.

Financial Statements

Financial Statements are a set of reports intended to provide information to the users of the statements. Financial Statements usually refers to one or all of the following individual statements: Balance Sheet, Income (Operating) Statement, Cash Flow Statement and Statement of Changes in Equity.

Fiscal Year A 12-month period selected to facilitate the reporting of financial information. The University of Saskatchewan uses a Fiscal Year of May 1 to April 30.

Fund The Fund element of the CFOAPAL is used to capture financial information including assets, liabilities, fund balance, revenues and expenditures for a discrete project or specific funding source at the university.

Fund Balance The Fund Balance reflects the unused resources of the fund or group of funds. Fund Balances are held within individual funds and reflect the net surplus or deficit that results from subtracting total Liabilities from total Assets.

Income Statement

An Income (Operating) Statement is a financial statement that summarizes the operations or activities of a project, department or unit over a defined period of time. A typical Income (Operating) Statement provides a summary of the Revenues and Expenses that have been incurred during the time period.

Liabilities Liabilities are amounts that are owed to another party. Liabilities are generally obligations that exist as a result of past events that will require an outflow of resources in the future.

Location The Location element of the CFOAPAL is used to identify unit specific information about a transaction in UniFi. It allows the ability to attach a building location to a transaction.

Organization The Organization element of the CFOAPAL is used to identify the university unit to which a transaction relates. The organization element consists of a hierarchy of university units, with only the lowest level being used on transactions.

Program The Program element of the CFOAPAL is used to capture information on major areas of institutional activity.


Revenues Revenues are inflows of resources into the organization. Revenues are resources received from an external source in exchange for goods and services or funding provided for a specific program or activity.

Taxes Payable A liability reflecting the amount of taxes collected that have not been submitted to the appropriate government.

Transfers Transfers are distributions of resources between different funds within the university.

UniFi UniFi is the name given to the university’s financial system.

introduction to basic accounting at the university of ...€¦ · fund accounting at the university...

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