Introduction

The Financial Module allows you to account for the school's finances. It is a fully-fledged accounting system in its own right.

Features

• Chart of accounts
• School services and subscriptions
• Existing financial system take-on
• Invoice learners, produce statements and receive payments.
• Debtors - produce invoices and statements and receive payments.
• Creditors - produce purchase orders, pay for goods, services and expenses on account.
• Record cash receipts from sales and other sources.
• Record cash payments for purchases and other payments.
• Sales, purchases, cash receipts, cash payments, general journal.
• Learner, debtors, creditors, general ledger.
• Perform any final adjustments and close an accounting period.
• Trial balance, balance sheet, income statement, cash flows, and owners equity.

Sections

The financial module is divided into the following sections:

• Setup - Before you can actually use the accounting system on a day-to-day basis, it needs to first be set up.

• Learners - Invoice learners, produce statements and receive payments.

• Debtors - Add debtors, produce invoices and statements and receive payments.

• Creditors - Add creditors, produce purchase orders and pay for goods, services and expenses on account.

• Cash Receipts - Record cash receipts from sales and other sources.

• Cash Payments - Record cash payments for purchases and other payments.

• Journals - Sales, purchases, cash receipts, cash payments and general journal.

• Ledgers - Learner, debtors, creditors and general ledger.

• Close Period - Perform any final adjustments and close an accounting period.

• Statements - Trial balance, balance sheet, income statement, cash flows, and owners equity financial statements.

Setup

Setting up the financial module has two main sections to it:

• Initial Take-on

• General Setup

Initial Take-on

A once-off setup performed in order to take-on an existing accounting system. The initial once-off take-on has two main steps:

• Step 1: Enter Opening Balances
• Step 2: Sign off Opening Balances

General Setup

A setup initially performed but that can also be revisited.

• Chart of Accounts - Here to add new accounts over time (all your existing accounts would have already been set up in the initial take-on).

• Settings - Configure various settings, such as school type, default bank accounts, etc.

• Service Groups - Set up the various groups to which school services can belong.

• School Services - Set up the school services themselves, to which learners can subscribe and be invoiced accordingly.

• Account Mappings - Set up which accounts are involved in the various day-to-day types of transactions.

Chart of Accounts

You need to enter your school's own chart of accounts.

• Bare Minimum - To use the financial system effectively you need to have at least the following accounts:

• Category - A convenient way to view a certain category of account (eg to only list all current asset accounts).

• Import - You can import a chart of accounts. This is especially useful if your school needs to adopt a standard chart of accounts from some governing body.

• Export - Save your chart of accounts so that it can be imported into another TS School application used by another school. This procedure is usually performed by governing bodies that want all their schools to comply with a certain standard chart of accounts.

• Details - The details of each account are as follows:

• Discussion of Accounts in General

Settings

Various settings used throughout the financial module:

• Type of school - Sole Proprietor, Partnership or Corporation

• Chart of accounts - A convenient link to the Accounts screen.

• Currency - The currency of your financial system (eg: USD or simply $)

• Default Bank Accounts - Which bank accounts are to be used for learners, debtors, creditors, receipts and payments. Obviously, if your school has only one bank account then only that bank account is used for all these items.

• Statement Comment - HTML text to go on statements, revealing conditions of payment, banking details and other pertinent information. For <ENTER> use <br> which stands for "break".

Service Groups

Service groups bundled together school services that need to be invoiced together. For example, if 150 school services need to be invoiced once a month, a "Monthly" service group should be created so that all 150 school services can belong to it.

Services

Each individual service needs to be added, indicating the service group a service belongs to. For example, if the service needs to be invoiced once a month, it should belong to the service group to be invoiced once a month.

Account Mappings

Certain accounts need to be mapped to save you the trouble of continuously selecting the right account when working with the system on a day-to-day basis.

The accounts to be mapped are as follows:

Learners

Setup

• Subscriptions - You need to indicate which learners subscribe to which school services before you can correctly invoice learner financiers. Simply select the service and then all the learners who subscribe to that service. A full list of services to which a learner subscribes can be found under the Service Subscriptions tab under the Financial tab of the Learner Screen.
  

Invoices

• Produce Invoices- Produce a batch of invoices for learner subscriptions to school services. Simply select the group of services and the learners you wish to invoice. This will produce invoices that then need to be processed (printed or emailed).

• Invoices - View, print or email invoices. These are to be sent off to learner financiers. You can check each and every invoice before sending (highly recommended) or you can simply email or print a whole batch.

Statements

• Produce Statements - Produce age analyses (statements). These are to be sent off to learner financiers. Simply select the from date and the learners for which you wish to produce statements. This will produce a list of statements that then needs to be processed (sent to learner financiers).

• Statements - View, print or email statements. These are to be sent off to learner financiers. You can check each and every statement before sending (highly recommended) or you can simply email or print a whole batch.

• Statement by Period - Show amounts owing per learner in order of those most behind on payments.

• Statement by Amount - Show amounts owing per learner in order of those who owe the most.

Receipts

• Payments - Record a payment made for a learner’s account (such as when a parent pays school fees)

• Receipts - View, print or email receipts. These are usually printed on-the-fly and immediately given to the payer.

Credit Notes

• Produce Credit Notes - If a learner has been incorrectly invoiced and the invoice has already been processed (printed or emailed) then a credit note needs to be produced in order to "correct" the invoice (otherwise you can simply delete it). Select the already-processed invoice that is incorrect and indicate the offending rows. For missing rows, indicate all rows as incorrect and create a new invoice after adding the new learner subscriptions.

• Credit Notes - View, print or email credit notes. These are to be sent off to learner financiers. You can check each and every credit note before sending (highly recommended) or you can simply email or print a whole batch.
  

Debtors

Debtors are customers of the school that purchase goods and services on credit. For example, someone might purchase old second-hand school equipment on account. Although such a scenario is rare, TS School caters for this. Another example might be a person that consults with one of the teachers. This person would first need to be set up as a debtor in order to be invoiced.

Learner financiers are not debtors of the school directly since it is through the learner accounts that monies are owed.

Setup

Debtors

You obviously need to first have debtors before you can work with them, so they need to first be set up.

List

Shows the complete list of debtors with total opening balances. This total will equal the opening balance of the debtors control account.

Details

Invoices

• Produce - Produce debtor invoices on-the-fly. These invoices then need to be processed and sent off to the debtors.

• Process - View, print or email invoices. These are to be sent off to the debtors. You can check each and every invoice before sending (highly recommended) or you can simply email or print a whole batch.

Statements

• Produce - Produce age analyses (statements). These are to be sent off to the debtors. Simply select the from date and the debtors for which you wish to produce statements. This will produce a list of statements that then needs to be processed (sent to the debtors).

• Process - View, print or email statements. These are to be sent off to the debtors. You can check each and every statement before sending (highly recommended) or you can simply email or print a whole batch.

• Statement by Period - Show amounts owing per debtor in order of those most behind on payments.

• Statement by Amount - Show amounts owing per debtor in order of those who owe the most.

Receipts

• Payments - Record a payment made for a debtor's account.

• Receipts - View, print or email receipts. These are usually printed on-the-fly and immediately given to the payer.

Credit Notes

• Produce - If a debtor has been incorrectly invoiced and the invoice has already been processed (printed or emailed) then a credit note needs to be produced in order to "correct" the invoice (otherwise you can simply delete it). Select the already-processed invoice that is incorrect and indicate the offending rows. For missing rows, simply create another invoice with the those new lines on it.

• Process - View, print or email credit notes. These are to be sent off to the debtors. You can check each and every credit note before sending (highly recommended) or you can simply email or print a whole batch.
  

Creditors

Creditors are suppliers of goods and services purchases by your school on credit. For example, your school might purchase school equipment on account.

Setup

Creditors

You obviously need to first have debtors before you can work with them, so they need to first be set up.

List

Shows the complete list of creditors with total opening balances. This total will equal the opening balance of the creditors control account.

Purchase Orders

When a school often purchases items on account from a certain supplier, a purchase order is produced and sent through to the supplier. The purchase order tells them that certain goods are required. They need to gather all the goods and send them along with an invoice. When a purchase order is printed, it is usually required to be signed by the person responsible for placing the order.

• Produce Purchase Orders - When you often purchase items on account from suppliers, purchase orders can be produced to speed up this process.

• Process - View, print or email credit notes. These are to be sent off to suppliers (creditors). You can check each and every credit note before sending (highly recommended) or you can simply email or print a whole batch.
  

Purchasing

• Purchases - These are purchases on account of items NOT for resale, such as the purchase of a Photo stat machine.

• Resale Purchases - These are purchases on account of items to be resold, such as the purchase of cool drinks for the canteen.

• Expenses - These are expenses incurred on account, such as a telephone bill (invoice) that needs to be paid.
  

Statements

• Statement by Period - Show amounts owed to each creditor in order of those for which your school is most behind on payments.

• Statement by Amount - Show amounts owed to each creditor in order of those to which your school owes the most.
  

Payments

Account Payment
Record a payment made to a creditor, such as when your school pays its telephone bill.

Credit Notes

Process credit notes received from suppliers.

Type of Credit Note:

• Purchase returns & allowances
• Correction of an invoice

Date
Desc
Amount

Cash Receipts

Sales

Record cash receipts from sales.

Other

Record any other cash receipts such as cash capital investments and notes payable.

Cash Payments

Purchases – Record cash payments for purchases

Other – Record any other cash payment such as a cash payment for the telephone account expense.

Journals

The journals are the books of first entry into the accounting system. The specific journals (sales, purchases, cash receipts and cash payments) record numerous order-of-the-day transactions.

Ledgers

The purpose of ledger accounts is to give an overall picture of the account with opening balance, movements (debits and credits for the period) and closing balance. Postings are made from the various ledger accounts as infrequently as possible to keep down the amount of information in the ledger accounts.

The ledger accounts can be split into subsidiary ledger accounts and a general ledger account. The subsidiary ledger accounts are the individual accounts of people and organizations associated with the school.

Close Period

Adjustments
Before a period can be closed all adjustments need to be made. Examples of adjustments are depreciation expense and ensuring that income and expenses that apply to the period are indeed included (even though they made actually have occurred outside the period).

Close Period
Use this option to close the period. This transfers net profit / loss to the:

• owner’s equity account (if the school is a company)
• capital accounts as per profit share (if the school is a partnership).
• capital account (if the school is owned by a sole proprietor).

Period Close

Use this screen to close the last period.

Shown

• Start Date
• End Date
• Status

Action

Close Last Period button

Statements

The various financial statements are:

• Trial Balance - Total of all accounts with debit balances compared to the total of all accounts with credit balances. Since every debit has a credit, the trial balance will always balance.

• Balance Sheet - Statement of financial position at a given point in time.

• Income Statement - Revenues minus expenses for a given time period ending at a specified date.

• Cash Flows - Summarizes sources and uses of cash. Indicates whether enough cash is available to carry on routine operations.

• Owner's Equity - Explains the changes in retained earnings.

Trial Balance

In the double entry accounting system (which TS School uses), every debit has a corresponding credit. The Trial Balance simply totals all accounts with debit balances and all accounts with credit balances. Since TS School is doing the debit and credit entries safely (ie there will ALWAYS be a debit and a credit) the Trial Balance will always balance. The purpose of the trial balance was traditionally to find errors but is included in TS School merely to assure any user that all is well (all entries being correctly journalized and posted).

Initial Take-on
After taking on the closing account balances of your existing accounting system (as opening account balances in TS School), the trial balance obviously needs to be in correct and in balance before the school principal can sign off the take-on as true and correct.

Balance Sheet

The balance sheet reports the amount of your school's assets, liabilities, and stockholders' (or owner's) equity at a specific point in time, where Assets = Liabilities + Capital.

You can either select a period (in which case the reporting pertains to the end of that period) or a date. It is therefore a "snapshot" of your school's financial position at a given point in time, after all relevant transactions have been recorded.

The balance sheet reports the resources of the entity. It is useful when evaluating the ability of the company to meet its long-term obligations. Comparative balance sheets are the most useful; for example, for the years ending December 31, 2000 and December 31, 2001.

Income Statement

The income statement shows how profitable your school has been for a period of time. You can either choose a period or date range.

Profitability is expressed as net income: Net Income = Revenue - Expenses

Revenue refers to inflows from the delivery of a product or from the rendering of a service. Expenses are outflows incurred to produce revenue.

Income from operations can be separated from other forms of income. In this case, the income can be described by:

Net Income = Revenue - Expenses + Gains - Losses

where gains refer to items such as capital gains, and losses refer to capital losses, losses from natural and other disasters or events, etc.

Cash Flows

The Cash Flow Statement summarizes your school's sources and uses of cash (you can see at a glance the cash generated and used by your school's various activities). It therefore indicates whether enough cash is available to carry on routine operations.

The nature of accrual accounting is such that your school may be profitable but nonetheless experience a shortfall in cash. The statement of cash flows is useful in evaluating your school's ability to pay its bills. For a given period (you can either choose a period or date range), the cash flow statement provides the following information:

• Sources of cash
• Uses of cash
• Change in cash balance

The cash flow statement reports from where your school obtained its cash and what it did with it. It breaks the sources and uses of cash into the following categories:

• Operating activities
• Investing activities
• Financing activities

The information used to construct the cash flow statement comes from the beginning and ending balance sheets for the period and from the income statement for the period.

Owners Equity

The Owners Equity statement explains the changes in retained earnings. Retained earnings appear on the balance sheet and most commonly are influenced by income and dividends. The Statement of Retained Earnings therefore uses information from the Income Statement and provides information to the Balance Sheet.

For a sole proprietorship:
Ending Equity = Beginning Equity + Investments - Withdrawals + Income

For a corporation:
Ending Equity = Beginning Equity + Investments - Dividends Paid + Income

The stockholders' equity in a corporation is calculated as follows:

Common Stock (recorded at par value)
+ Premium on Common Stock (issue price minus par value)
+ Preferred Stock (recorded at par value)
+ Premium on Preferred Stock (issue price minus par value)
+ Retained Earnings
----------------------------------------------------------------
= Stockholders' Equity

Note that the premium on the issuance of stock is based on the price at which the corporation actually sold the stock on the market. Afterwards, market trading does not affect this part of the equity calculation. Stockholders' equity does not change when the stock price changes.