What accounting do I
need to know as a
School Nutrition
Supervisor?
The LG work environment is a very quiet work environment
due to the needs of our programmers. Please be respectful of
that.
 Please put all cell phones on silent. Due to the metal
building, cell phone reception can be very poor. Feel free to
take calls just outside the conference room under the cover.
Restrooms: There are restrooms in the front of the building
as well as down the side hallway.
Attendance:
How many non-School Nutrition attendees? Finance or
other?
How many School Nutrition Supervisors? Less than 3
years?
Today’s Objective:
Be able to recognize and
correct problems based on
the information in your
Financial Statements.
143-73100-429-ELEM-ABC
Fund
Function
Object
Cost Center
Sub Object
TN State COA follows this format:
Fund - 3 digit
Function – 5 digit
Object Code – 3 digit
Cost Center – 5 digit
Sub Object – 3 digit
Object Codes are only used on Expenditures
Cost Centers and Sub Objects are:
Optional
Completely user defined
 Double
entry accounting is a standard
accounting method that requires each
transaction to be recorded in at least two
accounts.
WHY DOES THAT MATTER ? ? ?
Every debit balance must have an equal
and off-setting credit balance for each
transaction.
It provides for quick accuracy. Every
transaction must balance.
What is the difference between a Calendar year
and a Fiscal Year?
The Calendar year is January 1 through December 31.
 The Fiscal year is a period used for calculating annual (yearly)
financial statements for businesses and other organizations.
 For Tennessee school systems, the Fiscal year is July 1 through
June 30.
All Asset
Function
Numbers
begin with 1
(one)
ASSETS

Bank Accounts

Investment Accounts

Receivables

Inventory/Supplies

Due From Other Funds

Prepaid Expenses



ASSET ACCOUNTS
Normally carry a positive
(debit) balance
Debits increase the
ending balance
Credits decrease the
ending balance
What is an Accounts Receivable?
Accounts Receivable is revenue that has been earned for
goods or services that you have provided for which you have
not received payment. Accounts Receivable is an Asset on
your Balance Sheet or Trial Balance.
Example: USDA reimbursement requested for meals that have
been provided but for which you have not received payment.
When should I record an Accounts Receivable?
Generally, receivables are set up at the end of the year
(June 30) in order to record revenues in the correct fiscal
year.
All Liability
Function
Numbers
begin with 2
(two)
LIABILITIES

Payables

Due To Other Funds

Payroll deductions

Short Term Debt



LIABILITY ACCOUNTS
Normally carry a
negative (credit)
balance
Credits increase the
ending balance
Debits decrease the
ending balance
What is an Accounts Payable?
Accounts Payable is an expense that has been incurred
for which payment has not been made. Accounts
Payable is a Liability on your Balance Sheet or Trial
Balance.
Example: Supplies ordered and received in June that have
not been paid for by June 30.
When should I record Accounts Payable?
Generally, payables are set up at the end of the year
(June 30) in order to record expenditures in the correct
fiscal year.
All Equity
Function
Numbers
begin with 3
(three)
EQUITIES

Inventory

Long-Term Notes
Receivable

Prepaid Items

Restricted,
Committed, Assigned,
and Unassigned Equity



EQUITY ACCOUNTS
Normally carry a
negative (credit)
balance
Credits increase the
ending balance
Debits decrease the
ending balance
Assets
=
Liabilities
+
Equities/Fund
Balance
Assets
+
Deferred Outflows
=
Liabilities
+
Deferred Inflows
+
Equities/Fund
Balance
(Not included in the discussion today)
Balance
Sheet
vs
Trial
Balance
The Balance Sheet displays ending balances only
The Trial Balance shows Balance Sheet accounts with their
beginning balances and activity.
Seeing the beginning balance is often helpful.
In this particular case, it tells us that the Due from Other
Governments (receivable) has not been collected <OR> when the
amount was received, it was recorded incorrectly.
The Trial Balance also shows accounts with a zero balance.
Cumulative Budget entries for Revenue
Controlling account for Outstanding Current Year PO’s
Cumulative YTD Expenditures
Cumulative Liquidated Prior Year PO’s
Cumulative budget entries (BG) made to expenditure accounts
Cumulative YTD revenues
Current Year Encumbrances
Prior Year Encumbrances (if any)
Cumulative Budget entries (BG) made to Restricted for Operation of
Non-Instructional Services
HOW DOES CLOSING THE YEAR END AFFECT THE EQUITY?
Total Revenues are reversed through Restricted for Operation of NonInstructional Services which increases Equity
Total Expenditures are reversed through Restricted for Operation of NonInstructional Services which decreases Equity
The difference (net gain or net loss) remains in Restricted for Operation of NonInstructional Services
EXAMPLE: Prior Year’s Balance Sheet
$(74,404.44) Restricted
(572,239.49) Revenues
521,128.81 Expenses
$(125,515,12) After YE
Closing
(see previous slide)
 Salaries and Wages
 Payroll Taxes (Employer’s portion of Social Security and
Medicare)
 Insurance (Employer’s portion of health and dental)
 Purchases (Food, Supplies, Contracted Services)
 Equipment
Normally carry a positive (debit) balance
Therefore, a debit will increase expenses and a
credit will decrease expenses.
Why are Expenditures the only account type that uses
object codes? For example, 143-73100-499
 Expenditures are the only account type
segregated by department
 The Function defines the department
 The Object Code defines the type of
expenditure within the department
Budget Amounts
The Original Budget shows on the top line of the first column
Budget Amendments show on the bottom line of that column
The Total Budget (Original +/- Amendments) is in the next column
Actual Amounts
YTD Expenditures are on the top of each expenditure line
YTD Encumbrances (PO’s) are below the expenditure
The available amount (total budget less YTD expenses and PO’s) is
listed as the Unencumbered Balance
The final column show the current month’s actual expenses and PO’s
The Percent Used is listed below: Total expended (including PO’s)
divided by the total budgeted
 Lunch, Breakfast, Ala Carte
 Interest income
 Grants
 USDA Payments
 Transfers in from other funds
Normally carry a negative (credit) balance
Therefore, a debit will decrease a revenue
but a credit will increase a revenue.
Similar to the Statement of Expenditures, the first columns are the
budgeted amounts for Revenues
The next columns are the actual revenues received and the
percentage that represents of the total budgeted
The Unrealized column is revenue budgeted but not collected
The last column is the Current month’s revenue
ASSETS

Bank Accounts

Investment Accounts

Receivables

Inventory/Supplies

Due From Other Funds

Prepaid Expenses
Debit
Credit
Normally carry a positive (debit) balance
LIABILITIES

Payables

Due To Other Funds

Payroll deductions

Short Term Debt
Debit
Credit
Normally carry a negative (credit) balance
EQUITIES
Inventory
Long-Term Notes Receivable
Prepaid Items
Debit
Credit
Restricted, Committed, Assigned, and Unassigned
Equity
Normally carry a negative (credit) balance
REVENUES
Lunch, Breakfast, Ala Carte
Interest income
Grants
USDA Payments
Transfers in from other funds
Normally carry a negative (credit) balance
A debit will decrease a revenue but a
credit will increase a revenue.
EXPENDITURES
Salaries and Wages
Payroll Taxes (Employer’s portion of Social Security and
Medicare)
Insurance (Employer’s portion of health and dental)
Purchases (Food, Supplies, Contracted Services)
Equipment
Normally carry a positive (debit) balance
A debit will increase expenses and a credit will
decrease expenses.
Setting up Accounts Receivable
DR Due from Other Governments
CR Revenue
(This also increases your Revenues)
Receipting of Revenue Sources
Record Bank Deposit
DR Cash on Hand
DR Cash in Bank
CR Lunch Revenue
CR Cash on Hand
(This also increases your Revenues)
Writing Checks
Payroll
DR Expenditure or
Liability Accounts
DR Gross salary expense
CR Cash in Bank
CR Payroll Liabilities
CR Cash in Bank
(These transactions also increase your Expenditures)
Payroll
Setting Up EOY Payables
DR Gross salary expense
DR Expenditure Accounts
CR Payroll Liabilities
CR Cash
CR Accounts Payable
(These transactions also increase your Expenditures)
Paying Vendors for Vol. Ded. withheld & other Payables
DR Employee Deduction or Payable Accounts
CR Cash in Bank
(This also decreases your Assets.)
Assets normally have a debit balance
Asset accounts with negative balances
warrant investigation
Our software indicates a debit balance as a positive number
Liabilities normally have a credit balance
Liability accounts with positive balances
warrant investigation
Our software indicates a credit balance as a negative number
Expenditures on lines where there is no Budget need
reclassification or a Budget Amendment
Expenditures on lines where the Unencumbered Balance is positive
(the Percent Used is >100%) may require reclassification or a
Budget Amendment.
When the Unencumbered Balance is negative, there are still funds
available (Percent Used < 100%)
When the Unencumbered Balance is positive, more has been spent
than was budgeted (Percent Used > 100%)
How do I reconcile my payroll deductions?
TOTALS ON THIS REPORT SHOULD
MATCH AMOUNT BILLED BY INSURANCE
COMPANY
What are Cost Centers?
Cost Centers are User-defined codes in the
Chart of Accounts
For example: 143-73100-422-ELEM
Why do I need to use Cost Centers?
Cost centers allow you to track Revenues and
Expenditures by school
Cost Centers allow you to track revenues
and expenses by school
NOTE: If a summary line has actual expenditures or revenues
recorded, the Cost Center has not been properly keyed.
Reports can be run with Summarized information
Reports can be run with Cost Center detail
And reports can be run by individual Cost Centers
When the Total Ending Balance is a negative, the Equity
and Revenues exceed the Expenditures.
Negative is Good
Things I need to know about
Budgets
Things I need to know about Budgets
Budgets are entered in reverse from a regular transaction
o Budgeted Revenues are entered as a Debit
o Budgeted Expenditures are entered as a Credit
Budgeted expenditure is negative
-- a Credit
Actual expenditure is positive
-- a Debit
Things I need to know about Budgets
Budgets are entered by summarized Revenue or Expenditure
line item rather than by Cost Center
Budgeted amount
Actual amount
Things I need to know about Budgets
When do I need to do a Budget Amendment for Revenues?
Review your Summarized statements
Generally, Revenues are only amended if they exceed the
anticipated amount AND additional revenues are necessary to
cover an increase in Expenditures.
Revenues may also require an amendment if anticipated
amounts are significantly lower due to decreased meal counts.
Things I need to know about Budgets
When do I need to do a Budget Amendment for Expenditures?
Local policy dictates when amendments are required
Generally, actual expenditures should not exceed the budget in
any Function (e.g., 73100) or any Fund (143).
Things I need to know about Budgets
When do I need to do a Budget Amendment for Expenditures?
Line item expenditures generally require amendment based on
amount or percentage of overage—refer to local policy.
Line item not amended. Amount of overage is < $500.
Line item amended to prevent overage > 5% and $500.
OTHER USEFUL TOOLS AND
REPORTS
Vendor payment verification
The Account Analysis report
The SEARCH function
Where can I look if a Vendor says
he/she has not been paid?
You can also look at your Reconciled/Unreconciled checks in your
Bank Reconciliation
What is wrong with this expenditure?
Note that the account in question is 143-73100-422- -ELEM
To see detail entries posted
to an account, you can run
an Account Analysis
For the account in question, there has been a refund issued which explains the
credit to an expense account.
An Account Analysis report can be run for a month, quarter or year.
While it may be a lengthy report, it can be a valuable tool for reviewing
all transactions made to Fund 143.
How can I find a
transaction if I know the
amount?
To search for other transactions in the same amount, hit F3
Finding the right numbers
What is the purpose of the Annual Financial Report?
Determination of Excess Balance
Finding the right numbers
The Ending Balance from the prior year automatically rolls
forward into the current year report as the Starting Balance.
Finding the right numbers
The Starting Balance is automatically rolled forward from the
prior year report.
Any difference in Starting Balance will have to be run through
Current Year income or expenses. In this case, Expenses will be
increased by $307.67
Finding the right numbers
What would cause my starting balance to be different?
Audit adjustments made after the books were
closed.
Voided check that was outstanding from the prior
year.
Prior year purchase orders (entered in the system)
voided or closed out for amounts different than original
amount.
Finding the right numbers
Total Income is your total current year revenues.
Finding the right numbers
Trial Balance
Finding the right numbers
Statement of Revenues
Finding the right numbers
Total Expenses is your total current year expenditures.
Finding the right numbers
Trial Balance
Remember, expenditures were increased by $307.67 on the annual
report because of the Starting Balance difference.
Finding the right numbers
Statement of Expenditures
$307.67
Finding the right numbers
The Ending Balance should equal the Fund Balance amount after
closing the books for year end.
Asset Accounts
Liability Accounts
- Debit balance
- Debits to increase
- Credits to decrease
- Credit balance
- Credits to increase
- Debits to decrease
Monthly Tasks (at minimum)
- Reconcile Bank Accounts
- Reconcile Liability Accounts
- Review Trial Balance,
Statement of Expenditures and
Encumbrances, and Statement
of Revenues
Equity Accounts
- Credit balance
- Credits to increase
- Debits to decrease
Annual Financial Report
- Check the Starting Balance and
make necessary adjustments
- Verify the Ending Balance
Why do those balances roll over when Revenue and Expenditures
don’t?
Where does Fund Balance come from?
Why do YTD Debits and Credits only increase, never decrease?
What are payables and do I have to journalize them if I do PO’s?
Would Full Accrual accounting benefit me?
What are Control Accounts and where did they come from?
Why do some accounts show up on a Trial Balance but not on the
Balance Sheet?
What is each column in the expenditure report telling me?
Why is there activity in an account but no amount budgeted?
Do I care if one account is over budget but the total by CC is not?
Why are there two budget amounts showing up instead of one?
Why are numbers stacked on top of each other?
How do I know if I am over budget?
Is there a more concise or one line report showing budget information?
My Revenue/Expense Statement shows a negative ending balance.
Is that good or bad?
How do most LEA’s track school revenues and expenditures?
How do I set up Cost Centers?
How do I reconcile my payroll liability accounts?
Are there payroll reports that show people paid out of the wrong
program?
Thanks for coming and have a
safe trip home 