PROFESSOR: These audio notes are a supplemental aspect of the lessons that we'll be doing. They are to accompany the lessons, and to help clarify some of the information in them. Let's start by asking the question on page 3, what is accounting? And why are we doing accounting in this class?
Well, this is not an accounting class. This is a class on budgeting. But you need to understand enough about accounting in order to put together a budget, to understand a budget, to read a budget, to explain a budget to somebody else. So accounting is a way of collecting the data, organizing the data, summarizing it in proper ways, and being able to analyze it as a result of that.
The accounting system used in education in each state is separate for that state. We're going to be using Pennsylvania as an example so that we will be able to get into some detail about the system. If you are in another state taking this course, that should not be a concern. Because most other states have an accounting manual that is quite similar to Pennsylvania. Some of the numbers may be different, but the structure and organization will be quite similar. And you'll be able to pick up that in your own state, if you begin to use the system, quite easily.
Because all school districts in the state use the same accounting system, that means that the data that districts collect, and provide, and have is all the same. It's all consistent across all districts. An expenditure means an expenditure, a revenue means a revenue. And the different kinds of those mean the same thing.
It's uniform in that all districts are doing the same thing. And since it stays intact over time, with relatively few changes from year to year, it provides a consistent historical record so that you're able to go back and compare trends for expenditures, what kind of expenditures have been going up, transfer revenues, what kind of revenues have been going down or up. So you're able to understand what has been going on and put your current situation and your projections into the future in context.
Accounting provides information about all the financial transactions in a district. That means it provides the amount of money and it provides a description so that you know what that amount of money is. It's clearly not sufficient to say, this transaction was an expenditure of $2,000. It's [INAUDIBLE] expenditure for what?
So the accounting gives you not only the amount, but it has a coding system that allows you to say, this $2 million is for teacher salaries for regular teachers in a particular elementary school providing regular instruction. And it can take it down to that detail. You're able to summarize all those transactions over the similar kinds of transactions and put together a comprehensive picture from the district.
We're going to be looking at a lot of different kinds of financial concepts. Basically, they revolve around the accounts used in school systems. We'll start though with the idea of what is fund accounting? That's F-U-N-D. We won't try to stretch your belief and make it F-U-N accounting.
We'll look at the different kinds of accounts, the balance sheet accounts, which are assets, liabilities, and fund balances. And then we'll look at expenditures and revenues, and see how all these are tied together. And then we will take a detailed look at the accounting structure and the codes that are used to provide this information.