The following sections define common terminology used in Chapter 3 for those who may not be familiar with such terms. This chapter is not intended to be an all-inclusive text. Some of the terms are explained in further detail as they apply to the loan and scholarship programs.
A restricted fund is represented on the ledgers as a self-balancing group of accounts: assets, liabilities, revenues, expenses, and a fund balance; such funds are separated in the books of an institution and are limited to specific uses. Each loan and scholarship program is to be treated as a Restricted Fund.
It is important to note that the individual funds are separated completely from one another and from the general fund of the school and are self-balancing. That is, the debit balances of the debit accounts within the fund equal the credit balances of the credit accounts within the fund. This ensures integrity of the individual funds and provides control over the expenditure of the funds.
Aging of accounts is the process of identifying and classifying by time frames those payments of loan receivable accounts which have not been paid by the due date. For the loan programs, accounts must be aged by the following time increments:
Usually the loan receivable accounts are maintained as a subsidiary account. (See also Section 8 below, Subsidiary Accounts.) For purposes of the reporting requirements, this subsidiary account should also classify student loans as follows:
A contra account is an account which partially or wholly offsets another account. For example, a student loan (receivable) account may be offset by any amounts repaid by the borrower.
A control account is an account which primarily contains totals of one or more types of transactions, the detail of which appears in subsidiary accounts. Its balance equals the sum of the balances of the detail accounts. For example, the Loans to Students, In School account is a control account for all the individual student borrower subsidiary accounts. See also Section 8 below, Subsidiary Accounts.
In accounting, debit (DR) means left and credit (CR) means right. The left side of an account is called the debit side; the right side of an account is called the credit side. The general rules for debit and credit for accounts may be summarized as follows:
A journal is a book of original entry which provides a chronological record of the debit and credit elements of each transaction. As transactions occur, they are entered initially into the journal. At convenient intervals, such as weekly or monthly, the debits and credits recorded in the journal are transferred to the individual accounts in the ledger.
A ledger is a book of accounts. Each item of a monetary nature to be included in the reports issued by an organization is assigned an account in the ledger. Posting from the journal to the ledger results in each account having either a debit or a credit balance. This debit or credit balance is then shown on the particular report listing this item. Separate ledgers should be maintained for each loan or scholarship fund.
Subsidiary accounts are a group of similar accounts relating to the same activity or object, maintained in a separate record and controlled by an account in the general ledger. For example, each individual student borrower account is a subsidiary account. The total of all individual student subsidiary accounts can be summarized in the Loans to Students, In School account, a control account. See also Section 4 above, Control Account.
