Accounting

Types of Accounting Systems

• Cash System : Treats expenditures as actual expenditures only when money has been passed to the party owed. This tracks income as cash received and expenditures as expenses paid. Anticipated income is not placed on the books until money has been received
• Accrual System: Revenue and expenses are recorded as they occur. Most often used method because it yields a more accurate picture
• most organisations use both

Key Terms

• Equity: The amount of money invested by owners
• Assets: what the business owns (capital, material goods, assessed worth, investments)
• Balance sheet: Important financial statement which shows chances in business over a designated period - paints a picture of financial status
• Encumbered Funds: Money earmarked for future projects . Lay dormant or are temporary until released for payment. Money which is et aside to address impending debt
• Income Statement: Document to analyze business profitability.

Ethical Decisions

• Purchasing equipment and supplies with the intent of receiving can be seen as unethical
• Arbitrary purchases can be considered frivolous or unnecessary
• Purchases made primarily to benefit an individual

Kickbacks & Petty Cash Accounts

• Kickbacks: accepting kickbacks or gifts from a vendor may be deemed wrong or unethical
• Petty Cash Accounts: Funds used to purchase small consumables. Used for emergency purchases at nominal costs.

Bids, Quotes and Proposals (RFP)

• Goal: to determine equipment and/or service costs
• To encourage competition to elicit the best price
• Helps to ensure that the organisations money is utilised effectively
• Gives an idea of price, particularly the least expensive price
• Proposals:
• Typically used to obtain contractural services
• formalised written documents with specific critetirea
• Often used to select a vendor based off various factors (i.e. experience, worth etc.)

Cash Flow (Positive & Negative)

• Postive Cash Flow: available capital to pay current expenditures
• Negative Cash Flow: When indebtedness supersedes the available cash
• Cash flow crisis: may require the borrowing against receivables or payment postponement
• Astute Budget Management: the balancing of two factors - income & expenses

Journals

• Financial documents sport managers use to record daily financial transactions - refereed to as ledger
• Most business use 2 basic record books:
• Sales Journals : documentation of daily cash sales and receipts
• Disbursement Journals: documentation of individual business expenditures

Financial Audits

• Used to determine the viability of financial procedures made by a sport organisation
• Systematic check of basic financial procedures
• Discrepnacies and irregularities can be detected
• Business accounting practices must follow approved guidelines refered to as generally accepted accounting procedures and practices (GAAPP)
• Internal Audit : someone within the comipany investigating financial procedures. Employed to determine viability and effectiveness, and conducted by employees to assess own policies and procedures - could be bias
• External Audit : Someone from outside coming into conduct investigation. Determines whether accounting procedures and transactions are congruent with generally accepted business practices