Lesson 3 Overview

Accounting is the language of budgeting. The educational accounting system provides the structure and the detail to operate the financial side of the school district. It is the system for collecting fiscal data; for assembling the data into a coherent structure; for supplying the building blocks of the past, current, and future budgets; for providing necessary management reports to administrators; for analyzing the district operations; and for reporting the financial condition of the district. It is a pervasive element of school administration, and it has a strong influence on program operation by establishing which data are included and available and how the organization is managed.

Administrators do not have to be accountants or business managers, but they do need to understand and interpret budgetary and fiscal data in order to become successful. This lesson is focused on helping you understand the essentials of accounting in education as they apply to school and district administrators. Basic accounting concepts and terminology for education are reviewed to provide a working overview of accounting for administrators. The types of accounts—assets, liabilities, fund balances, revenues, and expenditures—are defined and explained. The state accounting manual is utilized extensively as it is both a conceptual guide to understanding the accounting structure and a reference source for defining and coding the various accounts.

Finally, a word for those unfamiliar with accounting systems and nervous about what they are about to get into. First, it is essential for an administrator to understand what an accounting system is and how it works. This is particularly true for expenditures since these accounts, their codes, and cost reports are in daily use at the school level. You will either know and control your school budget or it will control you.

Accounting may be a foreign language at first. However, persevere and you will be rewarded. You will very quickly will pick up the essentials and be able to locate the rest of the information when needed.

Lesson Objectives

After completing this lesson, you should be able to

• identify the purpose and uses of accounting in school systems;
• become familiar with fund accounting in schools and what the different funds are used for;
• explain the accounting equation—both the simple version and the full version;
• recognize the different kinds of assets, liabilities, and fund balances along with their definitions and account codes;
• define what a balance sheet is, what accounts are in it, and how they relate to one another;
• identify the major sources of revenues for a district along with their definitions and account codes;
• recognize the different dimensions of expenditure accounts and how they are used to identify an expenditure along with their definitions and account codes; and
• utilize the state accounting manual to locate codes for all types of accounts.

Lesson Readings & Activities

By the end of this lesson, make sure you have completed the readings and activities found in the Lesson 3 Course Schedule.