Glossary
| Term | Definition |
|---|---|
| Accounting Equation | Assets = Liabilities + Equity* Note: At IU, equity is the equivalent of fund balance. |
| Accrual Accounting | Accrual accounting is a method that records revenue when it is earned and records expenses when they are incurred, not when the cash is received. Different than cash accounting, this method provides a more realistic understanding of income and expenses and helps with long term projections. |
| Accrual Entry | An entry for an expense or revenue incurred in a period for which no invoice or payment changed hands by the end of that period. |
| Accrual Voucher | An accrual voucher is a KFS document used to post accrual, adjustment, and recode entries. |
| Affiliated Organization |
A legal entity operating substantially for the benefit or under the auspices of the university that operates in such a way that it could enter into a foreign source arrangement where part or all of the benefit of that arrangement is intended for the university. Significant Affiliated Organizations to IU include, but are not limited to, the following: Indiana University Foundation, Riley Children’s Endowment, IU Medical Group Foundation, and Regenstrief Institute, Inc. |
| Agency Funds | Funds held by an institution as custodian or fiscal agent for others such as student organizations, individual students, or faculty members. The agency fund is divided between internal and external fund recording. |
| Aging Report | An accounts receivable aging report is a record that shows the unpaid invoice balances along with the duration for which they’ve been outstanding. |
| As of Date | The as of date is the date specified in the parameters and shows the cut-off date of the information provided. |
| Auxiliary Enterprise Funds |
Auxiliary enterprise funds furnish goods or services either internally or externally and charge a fee directly related to the cost of the goods or services. The auxiliary enterprise fund at IU is broken out between: auxiliary funds and service funds. |
| Auxiliary Funds | The auxiliary fund is an enterprise that furnishes goods or services to students, faculty, or staff and charges a fee directly related to, although not necessarily equal to, the cost of the goods or services. This means that the entity is self-supporting. |
| Balance Sheet | A balance sheet, also known as the statement of financial position, is a financial statement that reflects the overall financial position of an organization at a specific period in time. |
| Cash | Cash is money in coins or notes, as distinct from checks, money orders, or credit. |
| Cash Basis | Accounting method which records revenues and expenses only when monies are exchanged. |
| Cash Equivalent | Cash equivalents are short-term assets that are easily and readily converted into a know amount of cash. |
| Cash Flow Statement | A cash flow statement, also known as statement of cash flows, is a financial statement that summarizes the amount of cash and cash equivalent entering and leaving an entity. |
| Cash Receipt | Cash receipt is the collection of money (currency, coins, checks). A company’s receipts refers to the cash that the company received. |
| Chart of Accounts | A chart of accounts (COA) is a financial organizational tool that provides a complete listing of every account in the general ledger of a company broken down into subcategories. The chart of accounts can be expanded and tailored to reflect the operations of the company. |
| Compound Annual Growth Rate (CAGR) | The compound annual growth rate (CAGR) is the average rate of return a fund has earned over the preceding defined number of years. |
| Contracts | Any agreement for the acquisition by purchase, lease, or barter of property or services by the foreign source, for the direct benefit or use of either of the parties. This includes all revenue generating contracts, not contracts where IU incurs the expense. |
| Contract and Grant Funds | Sources of funds include federal grants and contracts, state grants, and special appropriations, and gifts and grants from private sources. Restricted C&G funds should not be recorded in this fund group until the terms of the agreement under which they were given to the university have been met. C&G funds are subject to Uniform Guidance. |
| Credit | A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. |
| Current Liability | A current liability is an obligation that is expected to be settled within twelve months. |
| Debit | A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. |
| Deferral | A deferral often refers to an amount that was paid or received, but the amount cannot be reported on the current income statement since it will be an expense or revenue of a future accounting period. In other words, the future amount is deferred to a balance sheet account until a later accounting period when it will be moved to the income statement. |
| Designated Fund | The designated fund is the use of unrestricted funds for institutional designated purposes such as specific activity/project. Most designated funds are now budgeted and most have a multi-year life. The designated fund includes several major sub-fund such as continuing education, public services, etc. |
| Designated Reporting Unit (DRU) | University administrative offices with significant activities or responsibilities that may impact foreign gift reporting compliance. DRUs include, but are not limited to, Bursar, Office of Research Administration, Indiana University Foundation, Kelley School of Business, and Internal Audit. |
| Encumbrances | A main concept of government accounting, an encumbrance is a restriction placed on the use of funds to ensure there are enough funds for future expenses/obligations such as salary, loan payments, etc. |
| Endowment Fund | Endowment funds are funds with respect to which donors or other outside agencies have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity and invested for the purpose of producing present and future income which may either be expended or added to principal. |
| Expense | Expenses are defined as the cost incurred to do business or the outflow of resources associated with the general operations of an entity. |
| External Encumbrance | External encumbrances are reservation of funds to cover obligations arising from external activities such as when a purchase order is approved to reserve funds payable to a vendor. Encumbrances project future expenditures and provide fiscal officers with a more accurate representation of an accounts available balance. |
| Financial Accounting Standard Board (FASB) | The organization responsible for establishing accounting and financial reporting standards for companies and nonprofit organizations in the United States. |
| Fiscal Period | A fiscal period at Indiana University is broken out into 12 separate periods based on months in the calendar year. Period one is equivalent to July during the fiscal year. |
| Fiscal Year | A fiscal year at Indiana University spans from July 1st through June 30th of the subsequent calendar year. The last day of the fiscal year is June 30th. |
| Foreign Source | (A) A foreign government, including any agency of a foreign government; (B) a legal entity, governmental or otherwise, created solely under the laws of a foreign state or states; (C) an individual who is not a citizen or a national of the United States or a trust territory or protectorate thereof; and (D) an agent, including a subsidiary or affiliate of a foreign legal entity, acting on behalf of a foreign source. |
| Fund Accounting | Fund accounting is an accounting and reporting system commonly employed by independent colleges and universities to keep track of resources whose use is limited by donors, granting agencies, law, other outside individuals or entities or by governing boards. A fund is maintained for each specific purpose. |
| Generally Accepted Accounting Principles (GAAP) | US Generally Accepted Accounting Principles (US GAAP) is the combination of authoritative standards (requirements) and the commonly accepted ways of recording and reporting accounting information. |
| Gifts | The voluntary transfer of money or property by a foreign source made without consideration. |
| Governmental Accounting Standards Board (GASB) | The organization responsible for establishing accounting and financial reporting standards for state and local governments and those entities that are funded by state and local government. |
| Historical Cost Principle | The historical cost principle is used primarily for consistency and reliability among financial statements. According to the historical cost principle, an entity must report and account for items at their original cost when the asset was purchased. The amount reported should include all costs necessary to acquire the asset and prepare it for use including delivery and handling costs, site preparation fees, and installation costs. |
| Income Statement | An income statement, also known as the statement of revenues, expenses, and changes in net position, is a financial statement that summarizes the revenue streams, expense categories, and overall profitability of an entity. |
| Internal Encumbrance | Internal Encumbrances are a reservation of funds to cover obligations arising from internal activities that are chargeable to, but not yet paid from, a specific account (i.e. salary commitments, faculty travel, etc). Encumbrances project future expenditures and provide fiscal officers with a more accurate representation of an accounts available balance. |
| Journal Entry | Journal entries are records of business transactions. A business transaction is the exchange of goods or services for a form of payment. A journal entry is used to record each transaction and include more information about the transaction such as date, amount, description of the entry, and a unique reference number, often called a journal entry number. |
| Matching Principle | The matching principle is used to accurately record expenses within an accounting period. Under the matching principle, expenses and revenues that are related to one another should be recorded in the same period. |
| Materiality | Highlights any variance that meets the specified materiality threshold specifically for the income statement. Materiality is set at 10% of the associated revenue stream. |
| Non-Routine | An isolated transaction that will not recur on a regular basis. |
| Normal Balance | A normal balance is the side of the T account where the balance is normally found. When an amount is accounted for on its normal balance side, it increases that account. On the contrary, when an amount is accounted on the opposite side of its normal balance, it decreases that amount. |
| Operating Revenue and Expense | Operating revenues and expenses are defined as amounts associated with day-to-day operations of a business. These amounts are typically used to analyze the financial health of the organization and determine future cash needs. |
| Origin | The country to which a gift is attributable, the country of citizenship, or if unknown, the principal residence for a foreign source who is a natural person, and the country of incorporation, or if unknown, the principal place of business, for a foreign source which is a legal entity. |
| Other Restricted Funds | Other restricted funds are expendable for operating purposes, but restricted by donors or other outside agencies as to the specific purpose for which they may be expended. Commonly used other restricted funds include fellowships, scholarships and special state appropriations. |
| Pre-Encumbrance | An unofficial encumbrance, pre-encumbrances are used to reserve funds in anticipation of an official encumbrance created with a purchase order, travel authorization, or salary transaction. |
| Reconcile | The review of operating reports monthly to ensure that the revenue and expenditures posted to the account are those that were approved by the fiscal officer, or their delegate, and that they are allowable and appropriate. |
| Reportable Items | Value of money or property received, or expected to be received at a future date, as a result of a gift from, or contract entered into with, a foreign source. Individuals paying tuition, room and board, and fees related to a student’s education are not generally considered reportable items, unless the individual is paying for multiple students and acting as an agent of a foreign source because they would not meet the threshold. |
| Revenue Recognition | Revenue recognition is one of the five basic accounting principles. This principle ensures consistency when recording revenue on an entity’s income statement. This principle is intended to eliminate and mitigate against any overstatements in revenue. IU uses accrual accounting where revenues are recognized when realized and earned. To properly recognize revenue under accrual accounting, users must ensure three criteria have been met: performance, collectability, and measurability. |
| Routine | Transactions that happen on a recurring basis. |
| Special State Appropriations | State appropriations are appropriations made to the university by the State Legislature. Income fund deposits are from tuition and other receipts deposited into the income fund for operating purposes. |
| Split-Interest Agreement | A split-interest agreement is when more than one beneficiary is involved. This means, a donor is providing a gift that benefits a government and someone else (typically the donor, their spouse, or their children), so the benefit of the gift is shared. |
| T-Accounts | A tool used to help identify the ending balance of a given asset, liability, revenue, or expense. The left side is for debits and the right side is for credits. |
| Unearned Revenue | Unearned revenue is a liability account that reports amounts received in advance of providing goods or services. When the goods or services are provided, this account balance is decreased and a revenue account is increased. |