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A
Accessions: additions, both purchased
and donated, to collections held by museums, art galleries, botanical
gardens, libraries and similar entities.
Account: a record of an organization's
financial transactions maintained in a special book or ledger. Separate
accounts are kept for assets, liabilities, fund balances, revenues,
and expenses.
Accounts payable: outstanding bills
owed to others for services or merchandise. Listed in the current
liabilities section on the statement of financial position.
Accounting period: the period of time
for which an operating statement is customarily prepared, i.e. a
month (the most common accounting period), four weeks, a quarter
(of a year), 26 weeks, a year, 52 weeks.
Accounts receivable: money owed to
an organization. Listed in the current assets section on the statement
of financial position.
Accrual-basis accounting: an accounting
system that recognizes expenses when they are incurred and revenues
when they are earned, rather than when cash changes hands. It records
amounts payable and amounts receivable in addition to recording
transactions resulting from the exchange of cash.
Accrued payroll taxes: tax money owed
to the government on each employee's salary.
Adjusting (journal) entry: the record
made of an accounting transaction giving effect to the correction
of an error, an accrual, a write-off, a provision for bad debts
or depreciation, or the like.
Administrative budget: a financial
plan under which an organization carries on its day-to-day affairs
under the common forms of administrative management; a budget. The
term is usually employed in contradistinction to capital budget
or fund budget, where the plan covers transactions of a non-operating
character.
Annual report: a report an organization
publishers at the end of each fiscal year. The report includes required
elements such as auditors' report and the organization's statement
of earnings, statement of financial position, and statement of cash
flows. The report also includes elements such as letters and articles
by the organization's executives, information on its financial condition,
and significant events.
Annuity gift: a gift whereby money
or other property is given to an organization on the condition that
the organization bind itself to pay periodically to the donor or
other designated individuals stipulated amounts, which payments
are to terminate at a specified time.
Assets: anything organizations own.
These things might be physical assets such as buildings, inventories
of products, equipment, and cash. Or these things might be intangible
assets such a goodwill, trademarks, and patents. Listed as a category
on the statement of financial position.
Auditor: a firm of certified public
accountants an organization hires as an independent third party
to review its financial information. The auditor's main purpose
is to make sure the statements of earnings, statement of financial
position, and statement of cash flows fairly present the organization's
financial condition, and that they comply with GAAP.
Auxiliary activity: an activity that
furnishers a service that is not part of the basic program services
of the organization. A fee is normally charged that is directly
related to, although not necessarily equal to, the cost of the service,
i.e. university dining
halls, student union.
B
Balanced budget: a budget in which
forward expenditures for a given period are matched by expected
revenues for the same period.
Balance sheet: a financial statement
that reports an organization's assets and the claims against them
at a set date noted on the statement. Also called statement of financial
position.
Board-designated restriction: a restriction
that is self-imposed by the Board on a certain segment of its unrestricted
assets for some specific activity or project that is to be carried
out in the future. Board-designated restrictions have no legal significance.
Budget: a financial plan which estimates
the monetary receipts and expenditures for an operating period.
Budgets may be directed toward project or program activities and
are primarily used as a comparison and control feature against the
actual financial results.
C
Capital additions: gifts, grants,
bequests, investment income and gains on investments, restricted
either permanently or for a period of time by parties outside of
the organization to endowment and loan funds. Such additions also
include similar resources restricted for fixed asset additions but
only to the extent expended during the year.
Capitalizing an asset: the process
of recording the cost of land, building, and equipment as fixed
assets, rather than expensing them when they were initially acquired.
Cash: currency and checks on hand
and deposits in banks. Listed in the current assets section on the
statement of financial position.
Cash-basis accounting: an accounting
system that records only those events that involve the exchange
of cash and ignores transactions that do not involve cash.
Cash-disbursements journal: the journal
recording all financial transactions involving the disbursement
of cash.
Cash equivalents: short-term, temporary
securities that can be quickly and easily converted to cash. Listed
in the current assets section of the statement of financial position.
Cash-flow statements: a statement
of cash income and outgoing between two given dates.
Chart of accounts: a list that organizes
the agency's accounts in a systematic manner, usually by account
number, that facilitates the preparation of financial statements
and periodic financial reports.
Comparative statement: balance sheet,
income or flow statements, or other accounting summaries juxtaposed
for the purpose of contrasting the financial characteristics of
an organization from one period to another.
Conditional promise to give: a written
or oral agreement to contribute cash or other assets to another
entity in which the contribution depends on the occurrence of a
specified future or uncertain event to bind the promisor.
Current assets: assets an organization
can convert to cash within one year. Listed in the assets category
on the statement of financial position.
Current liabilities: obligations an
organization has to others, such as creditors, suppliers, etc.,
payable within one year. Listed in the liabilities category on the
statement of financial position.
Current restricted fund: the fund
that contains all the restricted assets that are available for current
use.
Custodian funds: funds received and
held by an organization as fiscal agent for others.
D
De-accessions: disposition of items
in collections held by museums, art galleries, botanical gardens,
libraries, and similar entities resulting from sales or disposals.
Debit and credit: technical bookkeeping
terms referring to the two sides of financial occurrence. The increase
or decrease effect on the account depends on the type of account.
The debits must equal the credits for any given financial occurrence.
Debt: money an organization has borrowed
and must repay, frequently with interest. Listed in the liabilities
category on the statement of financial position.
Deferred revenue: revenue that is
recorded before it is earned, i.e. payment for services that have
not yet been provided.
Deficit: 1. Expenses and losses in
excess of related income; an operating loss. 2. An accumulation
of operating losses ("negative" retained income).
Depreciating an asset: the process
by which the cost of a fixed asset is expensed over its useful life.
The annual charge to expense is referred to as depreciation expense.
Designated funds: unrestricted funds
set aside by action of the governing board for specific purposes.
Discretionary funds: funds distributed
at the discretion of one or more trustees, which usually do not
require prior approval by the full board of directors. The governing
board can delegate discretionary authority to staff.
E
Endowment: a unique type of legal
restriction that stipulates that the assets endowed must remain
intact for a stated period of time or occurrence; the revenue earned
from such assets may be restricted or unrestricted.
Encumbrances: commitments in the form
of orders, contracts, and similar items that will become payable
when goods are delivered or services rendered.
Excess (deficit) of support and revenue over
expenses: the difference between "Total Revenue"
and "Total Expenses" representing net financial results
of operations for the period.
Expendable funds: funds that are available
to finance an organization's program and supporting services, including
both unrestricted and restricted amounts.
Expenditure: the incurring of a liability,
the payment of cash, or the transfer of property for the purpose
of acquiring an asset or service or settling a loss.
Expenses: costs such as salaries,
rent, office supplies, and advertising. Listed in the operating
expenses category on the statement of earnings.
F
FASB: the Financial Accounting Standards
Board, is the governing board that formulates authoritative accounting
standards for nongovernmental agencies. These standards, which encompass
accounting rules, procedures and applications, define accepted accounting
practice and are referred to as Generally Accepted Accounting Principles
(GAAP).
Fixed asset: usually refers to buildings
and equipment that have a relatively long period of utility.
Full fund accounting: an accounting
system in which all assets are accounted for separately.
Functional classification: a classification
of expenses that accumulates expenses according to the purpose for
which costs are incurred. The primary functional classifications
are program and supporting services.
Fund: an accounting entity established
for the purpose of accounting for resources used for specific activities
or objectives in accordance with special regulations, restrictions,
or limitations.
Fund balance: the difference between
the value of an organization's total assets and total liabilities.
Funds held in trust by others: resources held and administered at
the direction of the donor by an outside trustee for the benefit
of the organization.
G
Generally accepted accounting principles
(GAAP): . a set of rules and financial reporting guidelines
organizations must follow to prepare and present the financial information
on the statements.
Grants: an asset given to an organization
by an individual or another organization, with a legal restriction,
usually quite specific, imposed upon its use.
Guarantor: one who promises to make
good if another fails to pay or otherwise perform an assigned or
contractual task.
I
Income: assets received resulting
in an increase in the fund balance.
Interfund receivable (payable): an
amount that is due from one fund to another.
Interfund transaction: a transfer
of assets from one fund to another.
Investment revenue: revenue generated
by the investment of assets.
L
Liabilities: an organization's debts
to a lender, a supplier, a landlord, and others. Listed as a category
on the statement of financial position.
Life annuity agreement: an agreement
whereby money or other property is given to an organization on the
condition that the organization bind itself to pay periodically
to the donor or other designated individual the income earned by
the assets donated to the organization for the lifetime of the donor
or of the designated individual.
Liquid assets: readily available cash
assets that can be used to address current liabilities.
Loan funds: resources restricted for
loans. When both principal and interest on the loan funds received
by the organization are loanable, they are included in the loan
fund group. If only the income from a loan is loanable, the principle
is included in endowment funds, while the cumulative income constitutes
the loan fund.
M
Market value: the realizable amount
for which an asset can be sold in the open market.
Modified cash-basis accounting: the
same as cash-basis accounting except for certain items that are
treated on an accrual basis. This is also known as a "hybrid
method."
Multi-year grant: an unconditional
promise to give grant assets to an organization by an individual
or another organization that extends beyond one year. These grants
must be recognized in the year the unconditional promise to give
is received and must be recorded using a discount rate to measure
the present value of the estimated future cash flow.
O
Object classification of expenses:
a method of classifying expenditures according to their natural
classification such as salaries and wages, employee benefits, supplies,
purchased services, and so forth.
One fund accounting: an accounting
system operating with only unrestricted assets in a single fund
classification.
Operating expenses: costs related
to an organization's operation. Examples are salaries, advertising,
and travel. Listed as a category on the statement of earnings.
Operating reserve: an unrestricted
fund balance that can be used to stabilize an organization's finances.
P
Permanent restriction: a donor imposed
restriction that stipulates that the contributed assets be maintained
permanently. Unless otherwise stipulated by the donor or state law,
the organization is permitted to use up or expend part or all of
the income derived from permanently restricted assets.
Pledge: a receivable representing
a specified sum that an individual or organization has promised
to contribute.
Posting: the process of recording
in the appropriate accounts in the general ledger, summarized figures
of the amounts that were recorded during the month in the books
of the original entry, the journals.
Promise to give: a promise to give
is a written or oral agreement to contribute cash or other assets
to another entity. A promise to give must contain sufficient verifiable
documentation that a promise was made and received.
Prospectus: a selling document used
for fundraising. A summary description of an organization's goals,
needs, history, financial information, and personnel.
Q
Quasi-endowment funds: funds which
the governing board of an organization, rather than a donor or other
outside agency, has determined are to be retained and invested.
The governing board has the right to decide at any time to expend
the principle of such funds.
R
Refundable advance: an asset that
is transferred to an organization before a condition has been substantially
met. Refundable advances are recorded as a liability on the balance
sheet until conditions are met at which time they are recognized
as revenue.
Restricted asset: an asset that has
legal restrictions imposed on its use by outsiders.
Restricted funds: a fund group that
contains assets available to operations that have specific legal
restrictions imposed upon their use by an external agency such a
s a grantor.
Revenue: assets earned or income from
services performed or goods sold.
S
Simplified fund accounting: an accounting system operating
with only two classifications of funds-those assets that are unrestricted
and those assets that are restricted by grantors and donors for
specific purposes.
Statement of cash flow: a financial
statement that reports the flow of cash in and out of an organization
for a set period, usually one year. It reports the operating activities,
investing activities and financing activities of the organization.
Statement of changes in financial expenses:
a statement that summarizes the financial resources available in
a period the purposes for which they were used.
Statement of earnings: a financial
statement that reports the results of an organization's business
operations for a set period, usually one year. Also called an earnings
report, income statement, statement of operations, and statement
of profit and loss.
Statement of functional expenses:
the financial statement that details the specific types of expenses
by object, i.e. rent, salary, that were incurred in each of the
programs and supporting activities delineated on the Statement of
Revenue, Expenses and Changes in Fund Balances.
Statement of income expenses and changes
in fund balances: the financial statement that summarizes
the financial activity for a given period of time. It presents the
income, expenses and inter-fund transfers for the period and shows
the result on the fund balances.
Statement of sources and uses of cash: an
optional statement that summarizes the cash available in a period
and the purposes for which it was used.
Support: income form voluntary contributions
and grants.
Support services: auxiliary activities
that provide the various support functions that are essential to
achieve the program services.
T
Temporary restriction: a donor-imposed
restriction on contributed assets that will eventually either expire
with the passage of time or will be fulfilled through action by
the organization.
Term endowment: a fund that has all
of the characteristics of an endowment fund except that at some
future date or occurrence, it will no longer be required to be maintained
as an endowment fund.
Tipping: The situation that occurs
when a gift or grant is made that is large enough to significantly
alter the grantee's funding base and cause it to fail the public
support test. Such a gift or grant results in "tipping"
or conversion from public charity to private foundation status.
Transfer: the moving of fund balances
from one fund to another, usually as a result of an intended change
in the use of assets.
Trial balance: a schedule listing
all the accounts in the general ledger along with the debit or credit
balance in each account to determine whether the total debits of
all accounts equal the total credits.
U
Unconditional promise to give: a "no
strings attached" written or oral agreement to contribute cash
or other assets to another entity.
Unrealized gain (or loss): the amount
by which the market value of an asset exceeds (or is less than)
the original cost of that asset.
Unrestricted asset: an asset that
has no legal restrictions placed on its use by outsiders; it can
be used in carrying on operations in any manner decided upon.
Unrestricted funds: sometimes called
operating funds or general funds, this fund group contains the assets
on which there are no restrictions by external authority and from
which the bulk of financial activity is usually handled.
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