Sales and Inventory Sytem

Topics: Generally Accepted Accounting Principles, Budget, Tax Pages: 19 (4562 words) Published: August 27, 2013
The State University of New York Fiscal and Accounting Procedures for Mandatory Student Activity Fee Programs require the custodial and disbursing agent (Sub-Board I) to establish and maintain budgetary accounts. The basic structure for recording and monitoring revenues and expenditures is the Annual Operating Budget. As part of its accounting system, Sub-Board I provides a Budgetary Control System modeled after those commonly used by governments and other not-for-profit entities which satisfies the fiscal guidelines, policies and procedures of the Board of Trustees and the State University of New York. All student governments and clients for whom Sub-Board I acts as Fiscal Agent must use the Budgetary Control System.

I.
Definition

What is a budget?
A budget is your management's plan or blueprint, in structured form, which projects or anticipates the desired outcome of financial activity for a specific set of resources, for a fixed period, usually one year. For our purposes, the Annual Operating Budget is divided into two separate components: Estimated Revenues - What are the anticipated sources of revenue and how much can management realistically expect to receive? Estimated Expenditures - How much does management expect to spend, and for what purposes are resources to be spent?

II.
Management Objectives

Why is a budget important?
A budget acts as the formal process that establishes the authority on how funds are to be collected and spent. Management’s objective is to provide a logical, detailed and realistic spending plan. Once a plan has been decided upon and is formally adopted by the student government/client governing body, the budget acts as an effective management tool by providing a means of identifying and allocating limited resources (Revenues), and monitoring their use (Expenditures). The budget also is used to help prevent the student government/client from overspending. Budget reports provide management with information on operations, allowing the organization to monitor and control spending 1

Management information and control

and revenue collection while they are in progress. Hence, budgets alone are meaningless unless they are used to motivate responsible action and to direct operations toward accomplishing objectives that have been established by management as desirable. Most important source of financial data

The budget is the single most important source of financial information. Almost all financial transactions are recorded in the budget. The budget is used to track all cash receipts, encumbrances and cash disbursements, and provides a means of tracking these transactions back to original source documents.

III. How is the budget structured?
In determining the basic elements of Estimated Revenues and Estimated Expenditures, a logical structure must be developed to codify and arrange the elements into units or sections that reflect the nature and structure of the operations themselves. The basic structural tool is the budgetary account. A budgetary account identifies a specific source of revenue or a particular type of expenditure by using a budgetary account number. Sub-Board’s Budgetary Control System uses the following budgetary account number format:

Budgetary Accounts

Fund component

Fund: The first three digits of the account number identify the student

government/client and the overall purpose of the funds accounted for in a particular budget, e.g. operating funds, capital funds, etc.

Department component

Department: The next four digits of the account number identify the

department, division, activity center, etc. within the internal operations of the student government/client.

Line Item component

Line Item: The next four digits of the account number identify the specific source of revenue or the type of expenditure for a particular department, e.g. Advertising Revenue, or Telephone Expense. additional four digits to further identify a...
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