Assets, Liabilities and Revenue Coding
Do you know the difference between an asset and revenue? Would you like to know where to code a monthly rent payment? What about the large donation you received at the end of the year, do you know where to code that? By far, the largest variety of codes in your Chart of Accounts will be in the Object code class. Other than your expenditure account codes – revenue, asset, and liability codes are necessary to properly allocate business purchases and expenses on your general ledger.
For in-depth information, sign up for our Assets, Liabilities and Revenue Online course!
The following major object code classes are used to identify these types of items:
- 1XXX = Assets
- 2XXX = Liabilities
- 5XXX = Revenue
In coding, it will be required that the Fund and Fiscal year be identified when using one of these types of object codes.
Assets
What is an asset? The Financial Accountability System Resource Guide (FASRG) defines for us that an asset is a probable future economic benefit obtained or controlled by your nonprofit charter school as a result of a past transaction or event. These can be anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value.
Here are the three categories of assets with a brief description of the included object codes:
- Current assets
- Cash (11XX); Receivables (12XX); Inventories (13XX); and Other Current assets (14XX)
- Fixed assets
- Land, Buildings and Equipment (15XX)
- Restricted assets
- Other Long-term assets (19XX)
It is essential that your Charter maintain accounting controls and properly account for the company’s fixed assets. A Capitalization policy should outline the details as to how assets are valued and classified, as well as capitalization thresholds.
Liabilities
What is a Liability? A liability is an amount a nonprofit charter school is obligated to pay to persons or groups outside the district.
Here are two broad categories of liabilities with a brief description of the included object codes:
- Current Liabilities
- Current liabilities (21XX); Accrued Expenses (22XX); Deferred Revenue (2310)
- Long-term debts (More than a year)
- Bonds and Loans Payable – Long term (25XX)
Commonly used liability codes, especially at the end of a fiscal year are: Accrued Wages payable, Accrued Expenses and Deferred revenue. Accrued Wages Payable will be where you record amounts earned by employees that has not yet been paid. Accrued Expenses is for liabilities incurred that will not be paid until a later period. Deferred revenue is money paid for a service that has not yet been delivered. Current liabilities are also where Payroll deductions and withholdings are coded. These liability accounts should be reconciled monthly.
Revenue
Revenue codes are used for accounts that summarize estimated and actual revenues. Revenue is the amount of money that is brought into a company by its business activities. As a Charter School, our primary business activity is our students. We receive funding based on student enrollment and attendance, but there are other items that give us Revenue.
Listed here are the three main funding sources for revenue with a brief description of the included major object classes:
- Local (57XX)
- State (58XX)
- Federal (59XX)
Monthly FSP deposits are received based on your individual FSP submissions.
Federal fund deposits are based upon monthly draws that support your awarded allotments.
Next steps
- Develop an efficient method to code easily and quickly. CSS provides our clients with many quick reference guides to simplify the coding process.
- Understand and explore the FASRG, modules 2 and 3. There are many sample reports and detailed tables to ensure TEA account code compliance.
- Be consistent!! In all you do, establish good practices for accurate account code reporting.
Available resources
First and foremost, refer to the FASRG-Module 3, for guidance on charter school coding. This guide provides tables of object codes with “Costs to Include” and “Cost to Exclude.”
For in-depth information, sign up for our Assets, Liabilities and Revenue Online course!