 Accounting — process of
  identifying, measuring, and
  communicating financial
 Financial accounting —
  provides information to
  external users
 Managerial accounting —
  provides frequent
  operational data and
  information to internal users
    Basic Accounting Principles
 Balance sheet — a financial report that
  gives a status report of assets, liabilities, and
  equity as of a specific date (used to show
  changes and the ability to pay debts)
 Income statement — a financial report of
  revenues and expenses for a time period
  (used to analyze success)
 Matching — account for revenues and
  expenses in same period
 Depreciation — lowering the value of an
  asset as it ages
       Balance Sheet                  Liabilities (what is owed)
                                         Current liabilities
   Assets (what is owned)*                 Accounts payable (bills
                                              from suppliers)
      Current assets                       Accrued taxes or taxes
         Cash                                payable (owed, but not
         Accounts receivable                 paid)
          (owed by customers)               Accrued expenses
         Inventory                           (owed, but not paid)
         Prepaid insurance                 Deferred revenues
                                              (advanced payments)
      Fixed assets                         Notes payable (short-
         Plant and equipment                 term loans)
          minus depreciation             Long-term liabilities
         Property                          Mortgage loan
                                      Equity (investment)
*Items are listed in decreasing          Funds invested
order of liquidity (readiness of         Retained earnings (net
                                          worth minus withdrawals)
being converted to cash).

                            Assets = Liabilities + Equity
                 BALANCE SHEET
               THE ATHLETIC ZONE
                SEPTEMBER 30, 2007
Assets                        Liabilities
Cash on hand         $    700   Accounts payable     $ 2,400
Cash in bank         $30,000    Accrued expenses     $10,200
Accounts                 $100   Deferred revenues      $800
Inventories         $101,400    Notes payable       $100,000
Prepaid insurance       $300                        $113,400
Office equipment      $7,500
  and displays
Land                 $50,000 Equity                  $76,600
                    $190,000                        $190,000
      Examples of Income Sources
 Advertising              Luxury boxes
 Concessions and          Merchandise sales
  food service sales       Parking fees
 Conference sharing       Premium seating
 Corporate                Program sales
  sponsorships             Radio rights fees
 Donations and gifts
                           Stadium or arena
 Facility rentals          naming rights
 Fund raising events      Student fees
 Guarantees               Television rights
 Institutional support     fees
 Investment income        Ticket sales
           Examples of Expenses
 Salaries and  Advertising and printing
  benefits       Athletic training supplies
 Grants-in-aid  Capital expenses
 Band           Facility maintenance
 Cheerleaders  General and administrative
 Equipment
                  (office equipment; furniture;
                  supplies; telephones; postage)
 Insurance
                 Loan and interest repayment
 Officials
                 Marketing
 Recruiting
                 Media and community relations
 Uniforms
                 Transportation, lodging, and
 Utilities
                  INCOME STATEMENT
                   Income                            Expenses
Ticket sales                $30,000   Salaries and benefits         $34,000
Program sales                $2,500   Team equipment                $14,000
                                      Team uniforms                  $6,000
Concession sales             $5,600
                                      Travel                         $7,000
                                      Officials                     $15,000
Merchandise sales             $800
                                      Security                       $1,300
Parking revenues             $1,100   Insurance                        $900
Advertising sales            $2,700   Office supplies and equipment $1,200
Private donor               $40,000   Telephone                         $800
Booster club donation        $9,000   Postage                          $4500
                                      Athletic training supplies      $8,000
                            $91,700   Team awards                     $3,000
         Managerial Accounting
On the following slide are listed the expenses,
revenues, assets, and liabilities for Private
University’s Athletic Department. These items
need to be placed in the correct category for a
balance sheet and an income statement.
When these statements are completed
correctly, the asset category and the
liability/equity category on the balance sheet
will each total $481,000. The athletic
department's income and expenses will each
equal $562,000.
Accounts payable                   $3,000 Office supplies purchases       $3,000
Accrued salaries                  $70,000 Officials' pay                 $23,000
Advertising (in game              $15,000 Parking income                 $14,000
Advertising (printing costs)      $10,000 Prepaid insurance               $2,000
Athletic training supplies         $7,000 Postage purchases               $7,000
(cost of)
Booster Club donation            $200,000 Prepaid ticket sales            $8,000

Cash in bank                      $56,000 Program sales                   $9,000
Concessions profits               $43,000 Salaries and benefits         $400,000

Equipment purchases               $40,000 Security expense                $2,000
Equity                           $200,000 Team equipment and clothing    $27,000
Facilities owned                 $370,000 Team travel costs              $40,000

Insurance costs                    $4,000 Telephone costs                 $4,000
Mortgage payable on facilities   $200,000 Ticket sales                  $200,000

Office equipment inventories      $26,000 Uniform purchases              $22,000
                                          Television rights sales        $81,000
Fund Accounting
  For nonprofit entities
  Current unrestricted fund
  Current restricted fund
   (such as for coaches’
   salary supplements)
  Endowment fund (usually
   for grants-in-aid)
  Retirement fund
  Plant fund (facilities)
              Types of Businesses
Sole Proprietorship     Partnership
 Advantages             Advantages
   Revenues only taxed    Revenues taxed only
    once                    once
   Owner makes all        Shared decision making
    decisions               and management
   Few government         Few government
    restrictions            restrictions
   Easy to form and to    Easy to form and to sell
    sell                 Disadvantages
 Disadvantages            Joint personal unlimited
   Unlimited personal      liability
    liability              Limited access to capital
   Limited access to       funds
    capital funds
 Advantages                    Limited Liability
                                  Corporation or Limited
   Liability is limited to the   Liability Partnership
    corporate assets
                                 Advantages
   Ownership is easily
    transferable                    Classified as a
                                     partnership for income
   Led by talented managers         tax purposes
 Disadvantages                     Has the liability
   Complex and costly to form protection of a
   Double taxation for C, not       corporation
    S, corporations              Disadvantage
   Answerable to                   Must comply with
    shareholders                     state and federal laws
   Must comply with state and
    federal laws
        Advantages of Budgeting
Plan and review entire operations
Provide guidelines for staff
Monitor expenditures
Provide information for fiscal control
Ensure accountability so expenditures can
 be measured and reported on
Types of budgets
   Line item, such as for uniforms, public
    relations, or office equipment
   Program, such as for a team or the
    marketing department
  Itemized Budget Request from
Coaches of each Team or Managers
       of each Department
          Cost and justification for
           each requested item
          Itemization of requested
           items, i.e., number, sizes,
           and description in full
          Quotes for each item to be
         Budgeting Assignment
You are the manager of Southwest Fitness
Club. Each year you must develop and
present a balanced budget to the owners. This
budget must include realistic revenues and
expenses given the size and scope of this
club (which you should provide). You may
include up to 5 revenue sources and must
include at least 10 anticipated expenses, with
amounts provided for each of the revenues
and expenses. Your budget should include a
brief justification for each budgetary item.
           Financial Planning
 Short-term planning — usually for less than
  two years; examines mostly internal data,
  such as cash flow, working capital, and a
  cost-benefit analysis of day-to-day
 Long-term planning — forecasting the
  future by examining mostly external factors,
  such as the competition
 Pro-forma budget — a financial plan for the
  future that reflects the mission and
  strategic plan expressed in financial terms
    Components of a Business Plan
 Plan summary
 Industry section
 Company section
 Analysis of the product or service
 Market section
 Marketing section
 Operations section
 Management and personnel section
 Financial projections section
 Capital needs section
               Fund Raising

 Establish a worthy cause (important
  opportunities for which to make a
 Identify prospective donors (be inclusive)
 Educate prospective donors about the
  worthiness of the giving opportunity
 Ask for a financial commitment (asking for
  money is a compliment)

             Anderson Family Strength Center
                Fund Raising

 Make the collection (the larger the gift, the
  longer it takes)
 Express gratitude so as to leave a lasting
  appreciation (as simple as a thank-you letter;
  or a dignified public recognition if this is what
  the donor wishes)
 Report to donor how the gift has been used
 Recycle (the best prospect is a giver who is
  happy with the opportunity to give and the
  outcome of the process)
                Fund Raising
Purpose           Examples
  Supplement         A-thons (jog-a-thon;
   budget              swim-a-thon; bike-a-
  Special needs
                    Bake/food sales
Precautions          Car washes
  Institutional      Celebrity events, such as
   policies            golf tournaments
  Parental           Raffles
   permission (in     Summer sports camps
   schools)           Yard work projects
  Money collection  Yard sales
         Fund Raising Assignment
State appropriations for high school sports have not
kept up with rising operational costs. The athletic
director (who also is a coach) and other coaches
have been asked by the principal to reduce the
budget for the overall program by $25,000, develop
plans for raising this amount of money, or identify
two sports for boys and two sports for girls that will
have to be dropped. Since as a group you do not
want to cut the already small team budgets or
eliminate teams, you choose to raise the needed
funds. Develop plans for the fund raising projects
that will be undertaken to raise $25,000. By School
Board policy, you may not directly solicit gifts or
donations from individuals or businesses.

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