2. Accounting Conventions and Procedures Thursday, November 19, 2009 1:30p – 2:25p, Forest II PJ Gustafson, Director of Educational Services

3. Agenda General CSI Accounting Rules Accounting Basics and Definitions Basic Transactions Inventory Transactions and Accounting Inter-Site Transactions Deferred Revenue Installments Installments and Deferrals Together Financing Question and Answer

4. General CSI Rules Balance-forward receivables only –CSI does not handle open-Item receivables –Members only have ONE balance, and it is in the Member A/R at their Home Site Spectrum NG is not a full Accounts Payable/General Ledger System –No Accounts Payable functions, no G/L reporting CSI Software uses Accrual-based accounting, not Cash-based

5. Accounting Basics Account Types: –Assets – what you own –Liabilities – what you owe –Equities – what you’ve earned (profits/losses) –Revenues – income –Expenses – what you’ve spent Debits and Credits –What you post to General Ledger accounts –Assets and Expenses – debit means you’re increasing what you have, credit means you’re decreasing –Liabilities, Equities, and Revenues – debit means you’re decreasing, credit means you’re increasing –All debits and credits must equal for G/L transactions

6. Accounting Definitions A/R to G/L Posting –Entering all of your sales transactions into the General Ledger Receivable –Money that is owed to you Payable –Money that you owe to someone else

7. Accounting Definitions Deferred Revenue –Method of recognizing revenue over the period of time that the product or service is delivered Amortization –Process of recognizing Deferred Revenue Installment –Method of paying a balance owed over a period of time Financing –Similar to installments, but you can set up interest rates, balloon payments, and more

8. Basic Transactions Revenue is credited Cash is debited A/R Account is used as pass-through

9. Inventory Accounting A bottle of water was sold on 3/1/2007 for $1.25, with a cost of $0.65 –Cash is debited for $1.25, Revenue is credited for $1.25 –Inventory Asset is credited for $0.65, COGS is debited for $0.65 An inventory adjustment is made on 3/6/2007 and one bottle of water is placed back into Inventory –Inventory Asset is debited for $0.65, COGS is credited for $0.65 Cost is determined by amount entered when item is Received –FIFO vs. LIFO Inventory Receivings do not affect the G/L –Inventory Asset is debited for received inventory when the bill for that product is entered into the A/P system

10. Inter-Site Transactions Site 1 Member goes to Site 2 and buys a bottle of water for $1.25, and charges it to their account When Billing is processed, the member’s card is drafted at Site 1, but the revenue goes to Site 2. Site 1 now owes Site 2 the Cash for that transaction, and is accounted for through the Intersite A/R and Intersite A/P Accounts.

11. Deferred Revenue Monthly Recognition Series Sales Program Registration Deposits Gift Cards

12. Monthly Recognition Setup –Deferred Income = Yes –Deferred Months set Repetitives automatically defer over the repetitive period –Deferred Account set –Revenue Account set When product is sold, schedule is created in the database, starting with the date of sale, unless set to Defer to Next Month

13. Monthly Recognition Membership sold on 3/1/2007 for $1200.00 and paid for with Cash, Check, or Credit Card, item is set to defer over 12 months Cash Asset is debited by $1200.00 and Deferred Liability account is credited by $1200.00 Deferral schedule is created in the database and continues through 2/1/2008

14. Monthly Recognition When A/R is Posted to G/L for 3/1/2007, the system will check the deferral schedule A/R Posting recognizes the deferral for 3/1/2007

15. Monthly Recognition As A/R is Posted to G/L for the day of sale each month, the system will recognize the remaining deferrals, until all deferred revenue has been recognized

16. Refunding Deferred Items Membership sold on 3/1/2007 for $1200.00 and set to defer for 12 months Member cancels on 5/31/2007, refund given for $900.00, the remaining value of membership Item code selected at POS, it asks for original invoice #. When original invoice is entered, the system finds the remaining deferrals and posts them to revenue as of the date of the refund. Amount is refunded directly from the revenue account.

17. Defer to Next Month Typically used for Monthly repetitives when the Billing Date is set to the 1 st Since repetitives automatically defer over the repetitive period, monthly repetitives will only have 1 deferral The first deferral is automatically scheduled for the day of sale, so if the Billing Date is the 1 st, it will be scheduled for the last day of the previous month When Defer to Next Month, revenue is held until the first of the following month, thus recognizing revenue in the proper month

18. Series Sales Setup –Rep. Freq. = Single –Series Sales = Yes –SS Quantity Entered –Deferred Income = Yes –Def. Account Set –Rev. Account Set System will recognize revenue over the usage of each session

19. Series Sales 10-Session PT Package is sold for $750.00 on 3/1/2007 When each session from the package is used, it will be entered into the series sales usage table

20. Series Sales The member uses each of their sessions, with one Adjustment on 3/19/2007 With each one the usage is recorded in the series sales usage table with an amount to recognize

21. Series Sales As A/R is Posted to G/L, the system checks the series sales usage table to see if there are any usages that should be recorded Any deferrals are recognized as of the dates that the usages occurred The adjustment moves money in the opposite direction, from Revenue to Deferred

22. Refunding Deferred Series Sales Member purchases a 10-pack of training for $750.00 on 3/1/2007. They use four sessions, then break their leg and ask for a refund. On 3/20/2007, you refund $450.00, the value of their remaining sessions. When you do this, it will automatically recognize the remaining sessions on the day of the refund, then issue the refund directly from the revenue account.

23. Inter-Site Series Sales Usage Package sold at Site 1 & set to defer Member uses a session at Site 2 Site 1 owes Site 2 for performing that session

24. Program Registration Setup –Set item code to defer –Go to Session Course Pricing Setup –Choose Defer by Program or Defer by Product

25. Program Registration Deferral Methods Program –Divides enrollment cost by number of Classes –Creates deferral schedule in database to recognize a portion of revenue on each class date Product –If “Defer at Sale” is Yes, will defer starting on day of sale over number of months set up on item code –If “Defer at Sale” is No and options populated, will defer starting on selected date and for selected number of months

26. Prog. Reg. – Defer by Program Program Costs $500.00 for 10 classes. Classes Scheduled for April 1, 3, 5, 8, 10, 12, 15, 17, 19, and 22. Member enrolls on 3/1/2007 and pays via Cash, Check or Credit Card System creates Deferral Schedule in the deferral table

27. Prog. Reg. – Defer by Program As A/R is Posted to G/L, the Deferred Revenue is debited by $50.00 and the Program Revenue is credited by $50.00 as of the day that each class takes place.

28. Prog. Reg. – Defer by Product Program costs $500.00, to be deferred over 5 months starting on August 1 Member enrolls on 3/1/2007 and pays by cash, check, or credit card System creates deferral schedule in tblartransdeferred

29. Prog. Reg. – Defer by Product As A/R is Posted to G/L for each deferral date, the Deferred Revenue is debited by $100.00 and the Program Revenue is credited by $100.00 until all 5 months have been recognized.

30. Canceling from a Deferred Program Program Costs $500.00 for 10 classes. Classes Scheduled for April 1, 3, 5, 8, 10, 12, 15, 17, 19, and 22. Member enrolls on 3/1/2007 and pays via Cash, Check or Credit Card System creates Deferral Schedule in the deferral table

31. Canceling from a Deferred Program Member Cancels from program on 4/7/2007 All remaining deferrals are recognized on that day Refund of remaining value is issued directly from Program Revenue

32. Deposits Setup –Create Item code and link to appropriate Deposit liability account –Select deposit item code on Program, Equipment, or Function

33. Program Deposits Program total cost is $300.00 Member enrolls in a program on 3/1/2007 and pays a $50.00 deposit Member pays for program on 6/1/2007, and the deposit amount is applied. The remaining $250.00 is collected from the Member.

34. Canceling from Program w/ Deposit Member enrolls in a program on 3/1/2007 and pays a $50.00 non- refundable deposit Member cancels from program on 6/1/2007 – cancellation fee of $50.00 is applied Deposit amount covers fee, so nothing more is collected from the member

35. Gift Cards Setup –Gift Card Product Code Point to Liability Account –Gift Card Bank Point to same Liability Account –Link Gift Card Payment type to Gift Card Bank Use –When it’s sold, cash is debited and liability is credited –When it’s redeemed, liability is debited and revenue for item purchased is credited –If used at another site, transfers take place through the Inter-Site Gift Card A/R & A/P X-fers

36. Installments Setup –Create Installment A/R Account (should be different than the Member A/R Account) –Create Installment item code that is linked to the Installment A/R Account –Select the Installment item code in Site A/R Setup and Contract Setup

37. Installments Member buys $500.00 item on 3/1/2007. They pay a $50.00 down payment, and the remaining $450.00 is set up to be paid in 3 installments starting on 4/1/2007. Cash is debited by $50.00, Installment A/R is debited by $450.00, and Revenue is credited by $500.00. The system automatically creates a repetitive using the Installment item code to charge $150.00 three times, starting on 4/1/2007

38. Installments When you process billing on 4/2/2007, the installment will be charged to the member’s account as of 4/1/2007 – Installment A/R is credited and Member A/R is debited When the member’s EFT or Credit Card is drafted, or they pay their balance, Cash will be debited and Member A/R will be credited

39. Installments The process repeats with each monthly billing until all installments have been charged

40. Canceling Installments Procedure –Delete the Installment from the member’s account –Remaining value will automatically be charged to member’s account –Go to POS and pull up the item code you’re refunding and enter the refund amount –Go to the Payments screen and CTA the remaining installment amount –Issue the refund using Cash, Check or Credit Card

41. Canceling Installments Member purchased item on 3/1/2007 and paid $50.00 down payment. Remaining amount set up to be paid in 3 installments of $150.00/mo for 3 months Billing processed on 4/2/2007 – First installment charged as of 4/1/2007 and payment collected on 4/2/2007 Member requests refund and you refund them $400.00 Delete the Installment – the $300.00 remaining amount is automatically charged to the member’s account Refund the original item code for $400.00, CTA the ($300.00) and give back the remaining $100.00 via Cash, Check, or Credit Card

42. Installments and Deferrals Member purchases membership for $1200.00 on 3/1/2007, to be deferred over 12 months Member pays $200.00 down payment and Installment plan created to pay remaining $1000.00 over 4 months, starting on 4/1/2007.

43. Installments and Deferrals Cash is debited by $200.00 for downpayment, Installment A/R is debited by $1000.00, and Deferred Liability is credited by $1200.00 Deferral schedule is created in tblartransdeferred Installment repetitive is created in tblarrepetitive

44. Installments and Deferrals As you Post A/R to G/L for the 1 st of each month, $100.00 gets moved from Deferred Revenue to Membership Revenue

45. Installments and Deferrals As you Process Billing on the 2 nd of each month, the installment repetitive will be charged on the 1 st, and the autopay credited on the 2 nd until all installments have been collected

46. Financing Similar to Installments, except that you can charge interest, setup a payment plan, accept early payments, refinance mid-term, and accept balloon payments

47. Financing Formula Standard Banking Formula Rate = APR/12

48. Financing Formula Example: –Principal = $1000.00 –APR = 12% –Months = 12 Monthly Payment = [rate + rate/[1 + rate]^months – 1] x principal Monthly Payment = [.01 +.01/[1 +.01]^12 – 1] x $1000.00 Monthly Payment = [.01 +.01/1.1268 – 1] x $1000.00 Monthly Payment = [.01 +.01/.1268] x $1000.00 Monthly Payment = [.01 +.07885] x $1000.00 Monthly Payment =.08885 x $1000.00 Monthly Payment = $88.85

49. Financing Schedule System automatically creates the schedule Payments are collected with Billing, just like Installments

50. Finance Accounting Member finances $1000.00 item for 12 months at a 12% APR, starting on 8/1/2008 Revenue is credited and Finance is debited for the principal amount Schedule is automatically created

51. Finance Accounting As Billing is processed on the 2 nd of each month, the Finance Payments will be charged to the member’s account as of the 1 st. If the member uses autopay, the draft will be posted as of the 2 nd of the month.

52. Early Payments When a member pays more than their payment amount, the entire surplus is applied to the Principal The system then recalculates based on whether you chose a Fixed Monthly Payment or Fixed Term in the setup. Fixed Monthly Payment

53. Early Payments Fixed Term

54. Question & Answer

55. Account Managers Eastern North America Western North America Toni Grafner Randy Cruz

56. Coming Up Next… 2:30p – 3:25p –New in SNG v4.5/Product Roadmap, Forest I –Adv. Trng.: Using the Facility Management Suite to Manage Your Facility, Forest II –Basic Trng.: Using Spectrum NG Reports, Forest III –Migrating from Spectrum to Spectrum NG, Cottonwood 4:00p – 5:00p – Town Hall Meetings –Health & Fitness Clubs and Wellness Ctrs., Forest I –Campus Recreation and Parks & Rec, Forest II –Non-Profits (JCC’s & YMCA’s), Forest III