Glossary of Accounting Terms
For a copy of our Financial Resources Booklet please contact me:
Wayne JamiesonGeneral ManagerCES
wayne@cessl.org.nz
www.cessl.org.nz Accrual Basis - An accounting and record keeping principle that recognises costs when incurred and income when earned, regardless of when the cash changes hand.
Accrual - A liability for goods or services received, but not yet paid for.
Accumulated Depreciation - The total depreciation charged to an asset since its purchase or creation. This will be the sum of the depreciation expense charge to an asset each year.
Asset - An asset is something that provides a service potential or future economic benefit to a school. Assets can be cash, investments, property, buildings, furniture, or equipment.
Balance Sheet - A financial statement showing an entity's assets and liabilities at a given point in time. Currently, this statement is called the Statement of Financial Position and Statement of Changes in NetAssets/Equity.
Creditors - People or organisations which have provided goods or services to the school and who have not yet been paid, (i.e. the school owes them money).
Current Asset - An asset with a life of less than one year, or that can be realised within one year, (e.g. cash, bank accounts, short term investments and Inventory [StockJ).
Current Liability - A liability that is due to be paid within one year (e.g. accounts payable, the amount of any lease or loan that is due within the next 12 months).
Equity Index (EDI) - Used to determine a school's level of equity funding. EDI replaces the socioeconomic decile system which was phased out from January 2023.
Debtors - People or organisations which have provided goods or services to the school and who have not yet been paid, (i.e. the school owes them money).
Deficit - When a school receives less income than it has paid in expenses, it makes a "deficit". In companies, this is known as a "loss".
Depreciation - One of the principles of financial reporting is that the cost of purchasing an asset is spread across the life of the asset. Charging depreciation is the accounting method used to reflect this annual cost.
Depreciation Expense - One of the principles of financial reporting is that the cost of purchasing an asset is spread across the life of the asset. Charging depreciation is the accounting method used to reflect this annual cost.
Equity - The value of the owner's investment in an organisation, calculated as the organisation's assets less its liabilities. For schools, this represents the Crown's (Government's) investment in the school.
Fixed Assets - An asset with a life of greater than one year, or that is not expected to be realised within one year (e.g. investment). Most schools set a minimum value below which items are expensed rather than recorded as fixed assets. Commonly this is $500 or $1,000.
Liability - An obligation that results in a payment to a third party or the loss in value of a school.
Operational Funding (also called Bulk Grant) - The money the board receives from the Government to implement the goals of the school's charter and to pay for the running of the school.
Property Occupancy (POD) - A formal record of the rights and responsibilities of the board in relation to the property.
Statement of Cashflows - A financial statement that shows all cash received and all cash paid by a school over a financial year.
Statement of Comprehensive Revenue & Expenses - A financial statement that shows the income and expenditure of a school over a financial year and whether they have made a surplus or deficit for that period. Monthly accounts: Income Statement - summary & detailed.
Surplus - When a school receives more income than it has paid in expenses, it makes a ‘surplus' in companies this is known as a "profit".
Working Capital - This is the amount that a school needs to pay for its day-to-day operations.