UNIVERSITY OF IDAHO
Accounting Portfolio
MAAC
Ryan Paluso
4/29/2013
Table of Contents
Example 1- History of Accounting Memo- Accounting 561…………………………………pg. 2
Example 2- Technical Definition Memo- English 317……………………………………….pg. 4
Example 3- Ratio Comparison Presentation- Accounting 598………………………………pg. 6
Example 4- Master Budget- Accounting 586……………………………………….………..pg. 8
Example 5- Cash Flow Summary and Financial Statement- Accounting 503………………..pg. 9
Example 6- Microsoft Access Query- Accounting 598……………………………………pg. 10
Courses Taken
Accounting 561- Writing, oral communication, accounting research, and ethical reasoning
Accounting 586- Writing, oral communication, financial statement preparation, critical thinking
Accounting 590- Writing, oral communication, critical thinking, ethical reasoning
Accounting 592- Writing, financial statement preparation, critical thinking
Accounting 515- Writing, oral communication, critical thinking, financial statement preparation
Accounting 598- Writing, financial statement preparation, critical thinking, accounting research
Accounting 503- Financial statement preparation, critical thinking, oral communication
English 317- Writing, critical thinking, ethical reasoning
Business 414- Writing, oral communication, critical thinking
Business Law 425- Critical thinking, ethical reasoning, writing, accounting research
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Example 1
Memo
To: Jason Porter
From: Ryan Paluso
Date: September 4, 2012
Subject: Accounting 561- The History of Accounting___________________________________
The purpose of the memorandum is to determine which development in the history of accounting
is the single most important to the development of the U.S. accounting system. Accounting
professionals and future accounting professionals have a responsibility to improve the
accounting system as a whole. But before one can look to improve the future of accounting it is
important to understand the history of accounting. It would be hard to be successful going
forward if we don’t take the time to see how we arrived here.
The history of accounting is a long and innovated one, so there should, and will be debate over
which is the single most important event. Arguments for the invention of writing, mathematics,
and money are all logical and valid opinions. Accounting would simply not exist if these events
did not occur. One could also argue that more recent events such as instituting regulatory bodies,
creating a conceptual framework, or changing the marketing of accounting are the most
important event. Again, it cannot be denied that the accounting profession would not be where it
is today without these events. In truth they are the rules, guidelines, norms, and beliefs that
accountants must abide by. However, it is my belief that none of the events stated above match
the impact that the creation of double entry accounting had for the accounting profession.
“The third and last thing necessary is that all one’s affairs be arranged in good order so that one
may get, without loss of time, all particulars as to the debt and credit of all of them, as business
does not deal with anything else. This is very useful, because it would be impossible to conduct
business without due order of recording, for without rest, merchants would always be in great
mental trouble (Fra Luca Pacioli (1494), 1924 pg.1).
Fra Luca Pacioli is considered by many to be the father of accounting and the creator of double
entry accounting. He was able to see that accounting is a service to the business world.
Accounting needs business just as business needs accounting. Without business there would be
no need for accounting, but without accounting a business would have no way of determining
what they own or what they owe. Double entry accounting has allowed business to classify what
they have into accounts (assets), compare it to accounts with what they owe (liabilities), and
ultimately giving them what they are worth (equity). “They (accounts) allow the precise
measurement of assets and liabilities and profits and losses that businesspeople need to make
their profit-maximizing decisions (Carruthers, 1991, p.35).”
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One of the biggest reasons that double entry accounting is the single most important event in
accounting history is that while it was originally created as a way for merchants to keep track of
transactions, it has developed into so much more. More than likely the idea of a financial
statement never crossed the mind of Pacioli and the original creators of double-entry accounting,
but in essence double entry accounting is the backbone of financial statements. So what started
as a way to keep track of transactions, ended up changing the way people look at businesses?
Multiple economic transactions that once had to be looked at individually can now be grouped
into accounts and looked at as a whole. Today the concept of an account is so basic, but it was
revolutionary to the world of accounting when it was originally derived with double entry
accounting.
Double entry accounting is also so important because of all the things it does for the business
world in general. “The complexity of economic reality is reduced, and decision makers are
presented with a simple “bottom line,” one that does not reflect all possible interpretations and
judgment (Carruthers, 1991, p.36).” Double entry accounting laid the way for business people
and investors to analyze companies, and easily compare one to another to determine profitable
ones from non-profitable ones. One could go as far to argue that double entry accounting was the
catalyst to capitalism and capital markets. If people did not have the confidence that double entry
accounting gives, it’s not hard to believe that there would be no capital market, or it would be
dramatically different. And it is really a simple explanation why, investors are not willing to
invest money when there is a certain amount of uncertainty. Double entry accounting allows for
the comparison of multiple companies at once, therefore making it easy to determine the
successful ones and reducing that uncertainty.
When looking at the different options for the single most important event that shaped U.S.
accounting system, one has to realize that accounting is a by-product of business. Accounting
exists because businesses need a way to keep track of and categorize transactions. Essentially,
the goal of accounting is to take multiple economic transactions and display them in a way that
users can read and interpret. Double entry accounting is the basis for how accountants display
information to users. Centuries after its creation it is still the underlying concept to the U.S.
accounting system. The first things accounting students learn is debts equal credits and assets
equal liabilities plus equity. While many factors play into the current U.S. accounting system,
double entry accounting has had the most drastic and everlasting effect, and that is why it is the
single most important event.
Bibliography
Carruthers, B. (1991). Accounting for Rationality: Double Entry Bookkeeping and the Rhetoric
of Economic Rationality. The American Journal of Sociology Vol. 97, 31-69.
Pacioli, Frater Lucas. (1494) 1924. Treatise on Double-Entry Bookkeeping. Translated by Pietro
Crivell. London: Institute of Book-Keepers
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Example 2
MEMO
To: David Thacker
From: Ryan Paluso
Subject: Technical Definition
Date: February 12, 2013__________________________________________________________
The purpose of this memo is to write a technical definition. I will be considering several factors
related to the defined word including audience, problem, purpose, and placement. I will first give
a technical definition followed by an extended definition to answer the factor stated above.
The word I have chosen is derivative. A derivative is a financial instrument for which the value
or settlement amount is derived from the value of something else. The term derivative is well
known around the accounting world, however many accountants do not fully understand what a
derivative is or how to account for it. The extended definition below should help to understand
the general idea of how derivatives are used. I would suggest using this definition and example
in a beginning accounting course.
The first step is to identify what is meant by a financial instrument. A financial instrument is
something that results in an exchange for cash. One person gets something, and in exchange they
give cash to another person. In this instance the person will be getting a derivative.
The second part of the definition is more difficult to understand. It helps to know the
characteristics of derivatives. All derivatives have the following three characteristics:



One or more underlying and more one or more notional amounts
It requires no initial net investment
Its terms require a value or settlement amount
Underlyings: An underlying is a specified price or rate included with a scheduled event. For
example, if you were going to buy a derivative to sell corn it may say the following: Person X
will sell 100 bushels of corn for $25 a bushel on January 1, 2014. The underlying is the specified
price ($25) with the scheduled event (January 1, 2014).
Notional Amount: A notional amount is a specified unit of measure. It’s the amount you are
going to be buying or selling. Continuing with the previous example the notional amount is the
100 bushels of corn.
Initial Net Investment: Derivatives deal with future amounts, therefor you will not have to
exchange cash on the day you buy a derivative. In the example the exchange of cash will occur
on January 1, 2014, not the day the derivative was purchased.
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Settlement amount: The settlement amount determined by multiplying the notional amount by
the specified price. In this example it is the 100 bushels X $25 per bushel for a settlement
amount of $2,500.
The purpose of derivatives is to hedge against risk. In the example the farmer would be hedging
against the risk that the price of a bushel of corn will drop below $25. The farmer has locked in
the $25 price and therefore does not need to worry about market fluctuations. While derivatives
are a very complex in accounting, this simplified definition and example should help beginning
accountants understand the basis behind them.
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Example 3
Primary Reserve Ratio
60%
University of Idaho Comparison with Select Peers
University and Foundation Combined
FY2011 and FY2012
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
2011
Utah State University
Colorado State University
University of Idaho
2012
Oregon State University
Montana State University
Industry Benchmark
Primary Reserve Ratio
Calculation: Expendable Net Assets + Component Unit Expendable Net Assets / Total Expenses +
Component Unit Total Expenses
Measures financial strength by comparing expendable net assets to total expenses. Provides a snapshot
of financial strength and flexibility by indicating how long the institution could function using its
expendable reserves without relying on additional net assets generated by operations. Trend indicates
whether an institution has increased its net worth in proportion to the rate of growth in its operating
size. It can also help an institution understand the affordability of its strategic plan.
A ratio of 40% or better is advisable to give the institution the flexibility to transform the enterprise (has
the ability to cover about five months of expenses from reserves). A ratio below 15% indicates that
expendable net asset balances are very low and short-term borrowing is usually needed on a regular
basis (only has enough reserves to cover two months of expenses).
U of I: Ratio increased to 33% in 2012, primarily due to net assets increasing while total expenses
decreased. However the rate remains below the benchmark ratio of 40%.
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Composite Financial Index
6.5
6.0
University of Idaho Comparison with Select Peers
University and Foundation Combined
FY2011 and FY2012
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2011
Utah State University
2012
Oregon State University
Colorado State University
Montana State University
Viability Ratio
Calculation: Expendable Net Assets + Component Unit Expendable Net Assets / Long-Term
Debt + Component Unit Long-Term Debt
Measures the availability of expendable net assets to cover debt should the institution need to
settle its obligations as of the balance sheet date.
A ratio of 1:1 or greater indicates that, as of the balance sheet date, an institution has sufficient
expendable net assets to satisfy debt obligations. Many public institutions can operate
effectively at a ratio far less than 1:1, partially because the ongoing benefit of state support is not
reflected in expendable net assets, but these institutions are less self-reliant and have
significantly less operating flexibility.
U of I: Ratio increased to 79% in 2012, primarily due to net assets increasing while long-term
debt remained flat. However, the rate remains below the 1:1 ratio and significantly below the
1.25:1 benchmark ratio.
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Example 4
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Example 5
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Example 6
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