Information Technology A to Z Index IT Service Support Request

Finance Term Definitions

 

A

 

Account Balance

The difference in dollars between the total debits and the total credits in an account.

Account Code

The first “A” in “FOAPAL” that describes the nature of the expenditures (salaries, wages, travel, equipment, etc.) and revenue (tuition, fees, gifts, grants, etc.), transfer and general ledger accounts in the operating ledger.  Also used to classify assets, liabilities and fund balances.

Accounts Payable Accruals

Amount to be paid TO external parties for goods and services rendered in the current year.

Accounts Receivable Accruals

Amount due FROM external parties for goods or services rendered in the current year.

Accrual

The accrual accounting method reports revenue when earned (rather than received) and expenses when incurred (rather than paid).  Therefore it may be necessary, particularly at year-end, to journalize revenues or expenses that have not yet been processed.  A reversing entry in the new year is necessary, so as not to double count the actual revenue or expense once it is processed.

Accrual Period

The University fiscal year runs from July 1 to June 30, whereby July is represented as period ‘01’ and June is represented as period ‘12’. (Jul 01, Aug 02, Sep 03, Oct 04, Nov 05, Dec 06, Jan 07, Feb 08, Mar 09, Apr 10, May 11, Jun 12,  Following the regular month of June is the accrual period, known as period ‘14’.  This allows certain users as well as Financial Affairs to prepare closing journal entries, based on June results, and still impact the current fiscal year. Period ‘14’ should be used when running year end reports. 

Activity Code

The second “A” in FOAPAL that is optional, used for independent reporting need and not mandatory for external reporting purposes.  EKU does not utilize this field.

Actual

Refers to real revenues, salaries, expenditures, or transfers that have been posted to a fund.

Agency

Sponsoring agency, as related to the grant’s area.

Approved

See Document Status.

A/P

Acronym for Accounts Payable.

A/R

Acronym for Accounts Receivable.

Assets

A tangible or intangible item that has a positive value to the University.  i.e. cash, building, equipment, government receivable.  An asset account should normally have a debit balance.

Authorized Signer

A person designated by the Financial Manager with authority to incur or approve charges and may either query or post information to/from a fund/organization for which the Financial Manager has been assigned financial responsibility.

Auxiliaries

Resources devoted to the activities and jobs that complement the range of services offered by the University.  i.e. food services, residences and printing.

Award

Term used to describe student aid awards.  i.e. bursaries, fellowships, scholarships, prizes and medals.

 

 

B

 

Balance Sheet

A report of financial position at a specific point in time of assets, liabilities, and fund balances of an entity.

Banner

Banner is the name of the integrated suite of software products that use client/server architecture and web applications.  It serves as an interface between users and the database where all system records are stored. Banner is a trademark of SCT (Systems and Computer Technology Inc.)

Budget

A financial plan estimating how resources will be allocated or spent during a particular period.   This also serves as a management tool to monitor levels of revenues and expenditures compared to expectations.

Budget, Accounted

Total budget, including original and budget adjustment. Referred to as Adjusted Budget.

Budget, Adopted

Permanent adopted budget (original budget) established at the beginning of the fiscal year. 

Budget, Adjustment

Changes to the Adopted (original) budget. May include both permanent and temporary amounts.

Budget Allocation

Amount set by the University that determines each organization funds.

Budget, Base

Budget amount (adopted or an adjustment) that is recurring each year.  Same as “Permanent Budget”

Budget Status

The difference between amounts budgeted and amounts expended or committed.  Budget Status is the appropriate measure of available funds for organization in which budgets are generally recorded.  Income and expenses recorded in these organizations are monitored and managed against recorded budgets.

Budget, Temporary

Budget amount (adopted or an adjustment) that will not recurring each year and is not included in any future year budget allocation.  Same as “Non-base budget”.

Bursary

An award, for undergraduate or graduate students, granted on the basis of academic standing and demonstrated financial need.

 

 

C

 

Capital Construction

Expenditures for the construction of a new building, renovation of an existing building, or landscaping.

Carry Forward

This is the year-end calculated amount (deficit or surplus) that is brought into the new fiscal year as a budgeted amount. 

Chart of Accounts (COA)

COA (Chart of Accounts is the acronym representing a series of code letters and a description that identifies a separate and distinct institution, in combination, are used to classify and report all transactions in all ledgers.  Represented by FOAPAL (Fund, Organization, Account, Program, Activity and Location).  You must specify a Chart of Accounts code for FOAPAL information. 

 

E = Eastern Kentucky University,

F = Foundation,

R = Arlington,

 

Commitment

The sum of all reservations and encumbrances. An encumbrance or transaction that records an amount that is to be set aside from funds.

Complete

See Document Status.

Contribution

Includes but not limited to gifts, grants, bequests and any similar transfer of resources (both monetary and in-kind).

Credit

An accounting entry that is either: an addition to a liability account; revenue in a fund balance account; a deduction from an asset account; or a reduction of expense in a fund balance account.

Credit Memo

The credit memo resembles a Vendor Invoice in every respect EXCEPT that the gross amount is a credit.  i.e. reversal of a charge or expense

 

 

D

 

Debit

An accounting entry that is either: an addition to an asset account; an expense in a fund balance account; a deduction from a liability account; or a reduction of revenue in a fund balance account.

Defaults

 A short cut to minimize data entry;  i.e. entering an Org code will usually populate both the recommended FUND and PROGRAM codes.

Deficit

A negative balance or less than $0.00.  The amount which an account’s expenses and transfers out exceed revenues and transfers in.  This is also known as Overdraft.

Deferred Charge

Expenditure for a service that will result in the generation of future revenues.   These charges are capitalized and amortized (expensed) in future years against the revenue they generate. 

Depreciation

Represents a portion the cost of a capital asset which is matched against the annual revenues generated by the assets.  The cost of the asset is amortized over its useful life to determine the amount of the annual depreciation expense.  Also referred to as Amortization.

Disapproved

See Document Status.

Document Number

A unique number sequentially assigned to every on-line document in process (documents need not be completed, approved or posted). 

Document Status

Financial transactions are created by online documents. i.e. purchase requisition, journal entry and inter-departmental charges.

 

A document is assigned a status to depict it’s phase in the processing cycle:

 

Incomplete = Document is created with a unique number assigned but is not officially submitted by the originator.  The document may still be altered.

 

Complete = Document is submitted by the originator with the intention to post the related transactions.  The document can no longer be altered, and is awaiting approval by reviewers.

 

Approved = Document has successfully received all the necessary approvals and is awaiting posting.

 

Posted = The document’s resulting transactions are posted to the University’s ledgers.  It is final and unalterable.

 

Disapproved = Document is rejected by a reviewer; the document’s approval history shows a DENY record.  At which point is mark Incomplete allowing the originator to remove or modify the document.

Document Type

An additional breakdown of types within a document coding scheme.  i.e.BD01 = Adopted Budget Entries; BD02 = Budget Adjustment; BD03 Temporary Budget Adjustment; INEI = Accounts Payable Check Disbursement; JA, JE, JG = Journal Entries; MCST = Computer Store Purchases; MPRT = Printing Services; PCxxxxx= Procured transactions; ect.

 

 

E

 

Encumbrance

Commits unspent balance due to firm obligation for future payment.  Typically generated by requisitions and purchase orders.  Included in Total Commitments.     

Endowment

Donations held in perpetuity and invested or available for investment to produce revenue for current use.  The income may or may not be restricted in purpose.

Endowment Capital Fund

Open for the purpose of holding donated capital in perpetuity.  This capital is used to generate annual income for particular restricted purposes, as specified by the donor.

Endowment Spendable Income Fund

Each Endowment Capital Fund has a corresponding Spendable Income Fund to which annual income distributed on the endowment capital is deposited and to which expenditures, according to donor wishes, may be charges.

Endowment, Annuity

Donated funds, the income of which is payable to one or more beneficiaries during their lifetimes.  On the termination of life interest, the principal becomes available for university purposed that may or may not have been restricted by the donor.

Endowment, Term

Funds received from a donor with the restriction that the principal may be expended after a stated period of time or upon the occurrence of a certain event.

Expenditure

The cost of goods delivered or services rendered, whether paid or accrued, including expenses, debt service, and capital outlays.

Expense

Charges incurred, whether paid or accrued, for operation, maintenance, interest, and other charges that are presumed to benefit the current fiscal period.

 

 

F

 

Fellowship

An award, for graduate students, granted on the basis of academic standing

Financial Manager

The faculty or staff member that has been assigned responsible and accountable for the financial operations concerning a fund/organization number.

Financial Statements

A set of reports consisting of a statement of financial position (balance sheet), a statement of financial activity, a cash flow statement, and explanatory notes.  The statement may report on the entire university or on one division.  The university issues an annual audited financial statement for the period ending June 30. 

Fiscal Period

A month within the fiscal year.  Codes 01 to 12 represent July to June, and period 14 represent the accrual period (once the regular June month is closed, the accrual period is opened to perform special entries for year-end financial reporting).

Fiscal Year

Twelve consecutive months used as an accounting period/cycle.  The university fiscal year is July 1 through June 30.

FOAPAL

FOAPAL\’fo-pal\ is the acronym representing each element of the new Chart of Accounts: Fund, Organization, Account, Program, Activity, and Location. Combined they provide a very powerful reporting tool.

 

This is the numbering system used by Banner to capture financial transactions and facilitate retrieval of information and financial reporting.  Each element of the Chart of Accounts (FOAPAL) is described next.

 

Fund:

The fund element is used to specify the funding source. Where money comes from or goes to.

Examples of funds include: State, E&G, Auxiliary Enterprises, Financial Aid, Grants and Private funds.

 

Organization:

The organization code is used to identify the organizational unit that is responsible for financial activity captured within the code. It identifies your department or Grant.

 

Account:

The account code is used to classify revenues and expenditures by type and spending categories.

Revenue account codes (5xxxxx) identify the type of revenue received, such as tuition or auxiliary sales revenue. Expenditure account codes identify the type of expenditure, such as salaries (6xxxxx) or supplies (7xxxxx).

 

Program:

The program code is used to identify the major purpose of expenditures. This is an additional identifier for your department. Program codes accumulate expenditure information into major categories such as instruction, research, and academic support.

 

Activity:

The activity code is an additional number that may be used to capture information for a specific event or major activity. Activity codes are assigned to transactions involving multiple organizations or funds that share responsibility for a common event or activity.  Eastern Kentucky University does not utilize this field.

 

Location:

The location code is an additional number that may be used to specify the assigned physical location of an asset being purchased or the location of a transaction that is different from the normal location of the organization.  Eastern Kentucky University does not utilize this field. 

 

Fund Balance

The difference between assets and liabilities in a fund that is carry forward in the general ledger account. 

Fund Code

The F in FOAPAL that defines the source of money and whether a restriction has been imposed by the contributor of the money as to how it can be spent.

Financial Manager

The faculty or staff member responsible and accountable for the financial operations assigned by fund/organization number.

 

 

G

 

GAAP

General Accepted Accounting Principles: a body of knowledge used to describe the basis on which financial statements are normally prepared, addressing recognition, measurement, disclosure and presentation issues.

General Ledger

The set of books against which assets, liabilities and fund balances are recorded.  The general ledger is the basis for the annual balance sheet.

General Operating Funds

Resources provided from the university budget, composed of various types of revenue, which are pooled and then allocated to individual organizations.

Gift

A resource provided by a donor who enters into the transaction voluntarily and receives nothing other appreciation in exchange for the resource he/she is providing.  Contributions can have a variety of forms including, but not limited to: cash, marketable securities, tangible fixed assets, and consumable commodities.  Gifts are classified according to the absence or presence of donor stipulations as unrestricted, temporarily restricted, or permanently restricted.

Granting Agency

An entity that provides support (money, equipment, etc) for a project.

 

 

H

 

Hierarchy

Each FOAPAL element has its own hierarchy which is defined by the fact that every code has a predecessor code.  The lowest level of a hierarchy contains a data- enterable level code to which transactions can be posted.  The higher levels contain roll-up codes used for summarizing reports.

 

 

I

 

Indirect Costs

Costs that cannot be easily identified with the primary functions of instruction, research, and public service, but are expended to meet the requirements of those functions.  i.e. utilities, other plant costs, etc.  (also referred to as overhead)

Indirect Cost Recovery

The charge to a grant or contract to reimburse the university for a share of indirect cost

Inventory

Amounts relating to all stock of materials for external resale, calculated as the lower of cost and net realizable value.

Investment

An exchange of cash for a less liquid asset that is expected to increase in value beyond the initial purchase price.  Investment vehicles include corporate stocks and bonds, government bonds and real estate.

Invoice

A bill submitted by a vendor with an invoice number, date, amount, and a description of goods or services provided. Eastern Kentucky University is tax exempt there should not be any sales tax listed.

Incomplete

See Document Status

Insufficient Funds

Relates to Budget Availability when an organization does not have an adequate balance to cover a new charge. Also known as NSF or Non-Sufficient Funds.

 

 

J

 

Journal

A chronological record of transactions.

Journal Entry

An entry consisting of debits and credits that balance in total to zero.  This entry is keyed in banner to redistribute transactions to other accounts or organizations.  

 

 

K

 

 

 

L

 

Labor Distribution

The allocation of an employee’s salary and wages to appropriate accounts to reflect the effort of that employee. 

Ledger

A set of books against which financial transactions are posted.  See Operating Ledger, and General Ledger.

Liability

A liability account normally should have a credit balance.  These are obligations to transfer assets or provide services to other parties in the future as a result of past transactions or events.  i.e. unpaid balance to vendors for items that have been received ; tuition and fees collected from students before the academic year started; and money set aside to fulfill promises to pay taxes, pension and health benefits for current employees. 

Location Code

The L in FOAPAL is an optional element to describe the physical whereabouts or financial transactions. EKU does not utilize this field.

 

 

M

 

Month-end

Monthly process to close the operating and general ledger.  Involves all transactions that occurred during that month, including internal direct billings.

 

 

N

 

Non-Sufficient Funds

Relates to Budget Availability when an organization does not have an adequate balance to cover a new charge. Also known as insufficient funds.

NSF

Acronym for Non-Sufficient Funds

 

 

O

 

Organization Code

The O in FOAPAL that defines each organizational unit of the University (VP, College, Department, etc) Organization codes are used extensively throughout both HR and Finance and form the basis for security and access to information and for roll up or summary reporting of HR and financial date.  

 

 

P

 

Packing Slip

An itemized list of the goods and quantities purchased, supplied by the vendor with a shipment.  A packing slip is used by the receivers to check against the purchase order.

PCard or ProCard

A University credit card assigned to authorize cardholders for the purpose of purchasing goods and services up to specified amounts for business purposes.  Also known as Procurement Card.

Petty Cash

Petty Cash Funds are cash advances granted to departments by the University to facilitate payment of minor expenditures not exceeding $50.00 per item unit cost.

Pledge

A pledge is an intent or promise to give. 

Position Numbers

Salary budgets are attributed to each unique position number.  The following is the coding convention for position numbers; 9xxxxx = Institutional Funded, Rxxxxx = Grant Funded.

Posted

Refers to the status of a transaction when it has been completed, approved and added to the ledger.  See Document Status.

Prepaid Expense

Expenses paid in a fiscal year which specifically related to the operations of a future fiscal year.

Principal Investigator (PI)

The faculty or staff person assigned responsibility for managing the research and financial activity of a fund/organization associated with a grant funded by a government or other external agency or sponsor. 

Program Code

The P in FOAPAL that defines the functional area in which funds are being spent.

 

 

Q

 

 

 

R

 

Restricted Funds

Funds provided by a contribution with stipulations imposed by the contributor, sponsor, donor, etc. who is external to the University. 

Restrictions

Stipulations imposed that specify how resource must be used.

Revenue

Income generated by the supply of goods or services by the University unit to an external customer.  i.e. tuition and fee revenue, sales of goods and services to external entities, earnings on investments, etc.

 

 

S

 

Scholarship

An award, for undergraduate students, granted on the basis of academic standing; extra- curricular and community activities as well as demonstrated financial need may also be considered.

Student Loan

Repayable financial assistance for undergraduate or graduate students granted on the basis of demonstrated financial need.

 

 

T

 

Transactions

Any event that involves an exchange of funds between two parties.  i.e. paying a bill to a vendor, paying an employee, collecting a fee from a student, interdepartmental charges, etc.

Transfers, Fund

A reallocation or contribution of resources that is not associated with specific expenditures or revenues

 

 

U

 

Unit Head

The individual responsible for an EKU unit. Usually the Chairperson or Director of a department or unit, or the Dean of a Faculty. Also known as Financial Manager.

Unrestricted Funds

Funds not subject to external limitations and therefore available for operations of the current or future periods.

 

 

V

 

Vendor

Refers to any business or individual paid through Accounts Payable.

 

 

W

 

 

 

X

 

 

 

Y

 

Year-end

The term used to describe both the time of closing and the process of closing the university’s operating cycle.  The year-end process involves closing and reporting on the financial results of the past year.  The process takes several months, from closing the records and reporting to departments, to providing information to the independent auditors, to preparing the annual report, and then preparing the supplemental reports. EKU fiscal year starts July 1 and ends June 30.

Year-end Cutoff Reports

June is the final month of EKU fiscal year.  There are several phases or cutoffs prior to the closing of the books.  Users involved with closing entries and analysis particular to year-end require reports that are frozen points in time.

Year-to-Date (YTD)

This refers to the cumulative revenues, salaries, expenditures or transfer posted to a fund since the beginning of the fiscal year (July 1)

 

 

Z

 

 

 

 

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