1. Copyright © Texas Education Agency, 2012. All rights reserved. Financial Data Collection Statistics & Risk Management 1

2. Copyright © 2012 Texas Education Agency. All rights reserved. “Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee. Call TEA Copyrights with any questions you have.

3. Copyright © Texas Education Agency, 2012. All rights reserved. A Brief History Robert (Bob) Cratchit (Scrooge’s book- keeper-by hand-Tiny Tim’s Dad) Robert (Bob) Cratchit (Scrooge’s book- keeper-by hand-Tiny Tim’s Dad) Computer Assisted Book-keeping Computer Assisted Book-keeping Integrated and Automated Accounting Systems Integrated and Automated Accounting Systems 3

4. Copyright © Texas Education Agency, 2012. All rights reserved. Shoe Box Book-keeping Small businesses often avoid book- keeping processes. Small businesses often avoid book- keeping processes. No time No time No expertise No expertise No funds No funds Big Mistake if Employees are involved. Big Mistake if Employees are involved. 4

5. Copyright © Texas Education Agency, 2012. All rights reserved. Shoe Box Book-keeping Save Receipts and Bank Statements and give them to an Accountant at Tax Time. Save Receipts and Bank Statements and give them to an Accountant at Tax Time. Is it unethical/unlawful to hide income to avoid taxes…. Is it unethical/unlawful to hide income to avoid taxes…. 5

6. Copyright © Texas Education Agency, 2012. All rights reserved. Book-keeping Vs. Accounting Book-keeping is the collection of business operations data performed on a hourly/daily basis. Book-keeping is the collection of business operations data performed on a hourly/daily basis. Accounting is compilation of the collected statistical data structuring it for high level analysis. Accounting is compilation of the collected statistical data structuring it for high level analysis. 6

7. Copyright © Texas Education Agency, 2012. All rights reserved. Book-keeping Methodologies Receivables: Income/Revenue Data Collection Receivables: Income/Revenue Data Collection Payables: Expenditure Data Collection Payables: Expenditure Data Collection Internal Transaction Data Collection Internal Transaction Data Collection 7

8. Copyright © Texas Education Agency, 2012. All rights reserved. Double-Entry General Ledger 8 Journals Journals Revenue (Credit/Debit Balanced) Revenue (Credit/Debit Balanced) Expenditure (Debit/Credit Balanced) Expenditure (Debit/Credit Balanced) Adjustment (Either Order) Adjustment (Either Order)

9. Copyright © Texas Education Agency, 2012. All rights reserved. Double-Entry General Ledger 9 General Ledger Accounts General Ledger Accounts Assets (Debit Balance +) Assets (Debit Balance +) Liabilities (Credit Balance -) Liabilities (Credit Balance -) Income (Credit Balance -) Income (Credit Balance -) Expense (Debit Balance +) Expense (Debit Balance +)

10. Copyright © Texas Education Agency, 2012. All rights reserved. Financial vs. Managerial Financial Accounting refers to industry accepted accounting practices used for public accountability. Financial Accounting refers to industry accepted accounting practices used for public accountability. Managerial Accounting is company specific and usually used internally to identify problems. Managerial Accounting is company specific and usually used internally to identify problems. 10

11. Copyright © Texas Education Agency, 2012. All rights reserved. Financial Reports Balance Sheet shows the tangible assets, liabilities, and capital accounts of an organization (Net Worth). Balance Sheet shows the tangible assets, liabilities, and capital accounts of an organization (Net Worth). Income Statement shows the operating income and expenditures (Profit or Loss). Income Statement shows the operating income and expenditures (Profit or Loss). 11

12. Copyright © Texas Education Agency, 2012. All rights reserved. For Who? Who will want to read Financial Statements/Reports Who will want to read Financial Statements/Reports – Owners/Investors – Managers – Customers – Vendors – Banks – Governments (Taxes & Agencies) 12