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. |
| As of Date | The as of date is the date specified in the parameters and shows the cut-off date of the information provided. |
| 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 known 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. |
| Contract | 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. |
| Credit | A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. |
| 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. |
| 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. |
| 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. |
| 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. |
| 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-Operating Expense | A non-operating expense is a business expense that is not related to an organization’s core operations. Examples include, but are not limited to, interest expense and inventory write-offs. |
| 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. |
| Object Code | An object code is used to organize and catalog financial data. An object code classifies a financial transaction as income, expense, asset, liability, or fund balance. |
| 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. |
| Prepaid Expense | Prepaid expenses are future expenses that have been paid in advance. In other words, prepaid expenses are costs that have been paid but are not yet used up or have not yet expired. |
| 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. |
| Routine | Transactions that happen on a recurring basis. |
| 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. |
| Uniform Guidance | Uniform Guidance is a set of authoritative rules and regulations about federal grants from the Office of Management and Budget (OMB). |