The Balance Sheet

A practical example &

explanation
Financial Services Division
Published by the
Communications Division
for Financial Services Division
Department of Education and Training
Melbourne
December 2016

©State of Victoria (Department of Education and Training) 2015

The copyright in this document is owned by the State of Victoria (Department of Education and Training), or in
the case of some materials, by third parties (third party materials). No part may be reproduced by any process
except in accordance with the provisions of the Copyright Act 1968, the National Education Access Licence
for Schools (NEALS) (see below) or with permission.

An educational institution situated in Australia which is not conducted for profit, or a body responsible for
administering such an institution may copy and communicate the materials, other than third party materials,
for the educational purposes of the institution.

Authorised by the Department of Education

and Training,
2 Treasury Place, East Melbourne, Victoria, 3002.
This document is also available on the internet at
http://www.education.vic.gov.au/school/principals/finance/Pages/guidelines.aspx
Balance Sheet Example...................................................................................................5

Introduction...................................................................................................................... 6

1. Accumulated Funds...................................................................................................6

2. Non-Current Assets....................................................................................................6

3. Current Assets............................................................................................................7

3.1 Bank accounts........................................................................................................7

3.2 Accounts Receivable Control..................................................................................7

3.3 Sundry Debtors.......................................................................................................7

3.4 GST purchases (Reclaimable)...............................................................................8

3.5 GST Clearing Account............................................................................................8

3.6 Provision for Non Recoverable Family Charges....................................................8

4. Current Liabilities.......................................................................................................9

4.1 Group Tax Clearing Account...................................................................................9

4.2 Accounts Payable Control......................................................................................9

4.2 Accounts Payable Control (continued).................................................................10

4.3 Revenue in Advance.............................................................................................10

4.4 GST on Sales.......................................................................................................11

5. Non-Current Liabilities.............................................................................................11

6. Report Certification.....................................................................................................11
Balance Sheet Example

General Ledger
Balance Sheet Specific Period (GL21161S)

Current

Accumulated Equity: Accumulated funds represent opening balances,

movements in revenue/ expenses, plus/less
Accumulated funds 279,277.30  results of surplus/deficit from Operating
Total Funds 279,277.30 Statement in previous years. PAGE 6

Represented by:
Non-current Assets
Computers/IT Equipment >$5,000 10,000.00
Musical Equipment > $5,000 6,000.00
Other Assets > $5,000 7,506.36
23,506.36  Historical cost of assets > $5,000. PAGE 6

Current Assets
High Yield Investment Account 108,000.00  Closing bank balances including unpresented
Official Account 98,000.00 cheques/deposits. PAGE 7

Accounts Receivable Control 24,000.00 Outstanding family charges & outstanding debtors
Sundry Debtors 50,000.00  eg hall hire PAGE 7.

GST Purchases Reclaimable -1,243.10  Accumulated balance of GST paid. PAGE 8

Provision for Non Recoverable -8,000.00  Journal entry reflecting estimated non collection of
Family Charges Essential Student Learning Items and Optional
Items PAGE 8

273,243.10
Total Assets 296,749.46

Current Liabilities
Payroll Clearing Account -4,289.18  Holding accounts for the collection of current
Group Tax Clearing Account -1,126.97 period’s obligations. PAGE 9

With-Holding Clearing Account 425.00

Revenue in advance -5,233.00  Revenue recorded that relates to future years.
PAGE 10

Accounts Payable Control -5,312.00  Amount owing to creditors. PAGE 9

GST on Sales -1,086.00
-17,472.16
Non-Current Liabilities
Total Liabilities -17,472.16
Net Assets 279,277.30  Total of assets less liabilities and should always
equal accumulated funds

5
Balance Sheet V 2.4
Introduction
The Balance Sheet is an important document for schools using CASES21 Finance
(C21F). This document outlines the major accounts listed in the Balance Sheet and the
effect of transactions on each account. The document aims to provide a better
understanding of the purpose and the makeup of accounts presented in a school’s
Balance Sheet.

Negative figures on the report represent credit balances and positive figures represent
debit balances.

The “Last Year” figures do not change. They are the figures reported in C21 as at
31/12/20xx.

1. Accumulated Funds
This figure consists of:

• opening balances for assets and liabilities brought forward from the previous year
(31/12/20xx)

• movements during the month or year of assets and liabilities through processing
of accounting transactions

• result of surplus/deficit (calculated as Revenue less Expenses) and represented

in the Operating Statement. A surplus increases Accumulated Funds, and a deficit
decreases Accumulated Funds.

2. Non-Current Assets
The asset accounts (the 2XXXX series of accounts in the Chart of Accounts) shown here
are those accounts that relate to items that appear on a school’s Asset Register (all
Assets >$5,000). The amounts represent the historical cost of the asset (purchase
price). Note: As depreciation is not calculated as part of C21F.

Non-Current Asset amounts in the Balance Sheet will reflect the original
purchase price of an asset until the point in time when the asset is disposed.
This will result in an inflated value in a school’s Non-Current Assets and
Accumulated Funds.

Once the purchase of an asset is recorded on the C21F system, at its historical cost, the
relevant asset account is debited by the amount of the asset as seen in the following
example where a piece of furniture is purchased for $5,500. Accounts Payable is also
credited (Refer 4.2).

Debit (Dr) Credit (Cr)

Furniture and Fittings > $5,000 (Asset) 5,500

Accounts Payable Control (Liability) 5,500

6 The Balance Sheet V 2.4.

3. Current Assets

3.1 Bank accounts

In the Balance Sheet, bank account balances reflect the closing balances for each bank
account resulting from YTD cash transactions entered in C21F.

These balances are more useful figures than the bank account balances contained in
bank statements because they include the impact of all unpresented cheques and all
outstanding bank deposits receipted. The preparation of a Bank Reconciliation
Statement is the mechanism to bring agreement between the school’s and the bank’s
balance. For cash flow monitoring and decision making purposes, the various bank
account balances displayed in the Balance Sheet, provide a more accurate and
complete cash position compared to what appears on bank statements.

3.2 Accounts Receivable Control

This is the total of all outstanding invoices issued to families.

Accounts Receivable increases when a school enters family invoices on to C21F.

Links to other reports

When Accounts Receivable increases, a revenue code on the Operating

Statement also increases. This is because there are always two effects of
entering a family invoice (hence the term “double-entry accounting”). If the
invoice was for a camp, then the camps and excursions revenue code will
increase by the same amount as Accounts Receivable.

Accounts Receivable decreases when a family pays money to the school that is
relevant to a family invoice. The accounting effect of entering this receipt into C21F is a
decrease in Accounts Receivable as it reflects that the family no longer owes the money
to the school for the relevant invoice.

Links to other reports

When Accounts Receivable decreases following a receipt of money, the

school’s bank account (Official Account) will increase (again this is because
there are always two effects of a transaction in double entry accounting).
However the revenue from the original family invoice stays the same on the
Operating Statement.

If a school wishes to reverse the original family invoice a credit note can be
entered. This will decrease Accounts Receivable and also decrease the
revenue on the Operating Statement. The amount of the decrease will be the
amount of the family invoice that is being reversed.

It is important that a school reverses anticipated non recoverable invoices as

soon as it is determined that the amount will not be paid. This process
ensures that a school’s Accounts Receivable amount more accurately reflects
the amount of funds the school expects to collect from families. This also
ensures that revenue on the school’s Operating Statement is not inflated.

3.3 Sundry Debtors

This is the total of all outstanding invoices issued to non-families for items such as Hall
Hire.

Sundry Debtors operates in the same manner as Accounts Receivable.

7
Balance Sheet V 2.4
3.4 GST purchases (Reclaimable)
This account is the accumulated reclaimable GST paid by the school. The account acts
as a tax credit account. This account will increase when purchases are made throughout
the period. Each time a purchase (including GST) is made by the school a GST amount
is paid. That GST amount can be claimed back from the ATO. The account collects the
GST portion of the payment.

For example: a typical purchase of a smartboard would create the following entries

Debit (Dr) Credit (Cr)

Smartboard (Non-Current Asset) 6,000

GST – Purchases (Reclaimable) 600

(Negative Asset)

Accounts Payable Control (Liability) 6,600

The account is an asset account and along with GST on Sales, and other tax items, is
used to calculate the Business Activity Statement (BAS) refund or payment. The GST –
Purchases (Reclaimable) account is automatically calculated and cleared when
processing end of period BAS.

3.5 GST Clearing Account

This is an automated calculation of all GST related amounts. The figure is used to
calculate this period’s BAS. This account is used to clear the GST Purchases and GST
Sales accounts and contains the net effect of both accounts (GST Purchases and GST
Sales).

3.6 Provision for Non Recoverable Family Charges

This figure is an estimate of the amount of parent payments for essential student
learning items and optional items that a school expects not to have collected by the end
of the year. This figure appears as a negative figure in the Current Assets of the school
as it is an ‘offset’ account for Accounts Receivable. This account is used to accurately
portray the true expected receivables to be reported.

To recognise the expected uncollectable essential student learning items a journal must
be processed. The journal reduces the revenue for Essential Student Learning Items and
the Optional Items (a decrease in Revenue) and increase a Provision for Non-
Recoverable Family Charges (an increase in a negative Asset).

Debit (Dr) Credit (Cr)

Essential Student Learning Items (Revenue) 500

Optional Items (Revenue) 300

Provision for non-recoverable

Family Charges (Negative Asset) 800

8 The Balance Sheet V 2.4.

4. Current Liabilities

4.1 Group Tax Clearing Account

The Group Tax Clearing account is a holding account for PAYG tax to be paid on school
level payroll. This account will automatically increase during the period when the payroll
is processed and then be eliminated when a school’s BAS is processed.

4.2 Accounts Payable Control

This is the total amount of outstanding creditor invoices – invoices awaiting payment.
Accounts Payable increases when a creditor invoice is entered in C21F.

It is important to enter invoices when they are received as the commitment to pay that
amount is correctly reflected on the Balance Sheet and the GST can be claimed in a
timely manner.

Links to other reports

When Accounts Payable increases, an expense code on the Operating

Statement or a non current asset code on the Balance Sheet also increases.
This is because there are always two effects of entering an invoice (hence the
term double-entry accounting). If the creditor invoice was for ‘Bob’s
Plumbing’, then the Repairs and Maintenance expense code will increase by
the same amount as the Accounts Payable.
Debit (Dr) Credit (Cr)

Repairs and Maintenance (Expenditure) 200

Accounts Payable Control (Liability) 200

Debit (Dr) Credit (Cr)
200

Accounts Payable decreases when a creditor is actually paid. The accounting effect of
entering the payment in C21F is a decrease in Accounts Payable as it reflects that the
creditor is no longer owed any money (The liability has been reduced).

Links to other reports

When Accounts Payable decreases, the school’s bank account (Official Account) will
also decrease (again this is because there are always two effects of a transaction in
double entry accounting). However the expense from the original invoice stays the same
on the Operating Statement.

Debit (Dr) Credit (Cr)

Accounts Payable Control (Liability) 200

Official Account (Asset) 200

9
Balance Sheet V 2.4
4.2 Accounts Payable Control (continued)
If a school wishes to reverse the original creditor invoice entered in C21F a credit note
can be entered. This will decrease Accounts Payable and also decrease the expenditure
on the Operating Statement. The amount of the decrease will be the amount of the credit
note being entered. Using the Bob’s Plumbing example from earlier, if a credit note was
processed the following adjustments will occur:

Debit (Dr) Credit (Cr)

Accounts
Debit (Dr)Payable
Credit Control
(Cr) (Liability) 200

Repairs and Maintenance (Expenditure) 200

It is important that a school reverses creditor invoices as soon as it is determined that they
will not be paid. This process ensures that the Accounts Payable figure more accurately
reflects the amount of creditor invoices that are awaiting payment. This also ensures that
expenditure on the School’s Operating Statement is not inflated.

4.3 Revenue in Advance

When invoices are processed for parent payments for Essential Student Learning Items
and/or Optional Items that relate to the next school year, this account is used to separate
next year’s revenue from this year’s revenue so as not to over/under state revenue in the
two affected periods (this is the essence of accrual accounting, being the need to record
transactions within the period they occur). This process is commonly referred to as a
“balance day adjustment”.

Firstly, a journal entry is processed at the end of the school year to reverse the original
parent payments for Essential Student Learning Items and Optional Items revenue entered
in the system. This has the effect of decreasing Revenue in Advance liability account in the
Balance Sheet. The Revenue in Advance account is treated as a liability, as it is revenue
that the school has recognised without providing any services. The school has an
obligation to perform the services in the next school year.

31 December Debit (Dr) Credit (Cr)

Essential Student Learning Items (Revenue)3,000

Optional Items (Revenue) 2,000

Revenue in Advance (Liability) 5,000

Secondly, a reversal of this journal entry occurs at the beginning of the next school year.
This ensures that revenue is recognised in the correct school year. The reversal has the
effect of reinstating the original revenue amount in the Operating Statement and
eliminating the Revenue in Advance liability.

1 January Debit (Dr) Credit (Cr)

Revenue
10 in Advance (Liability) 5,000 The Balance Sheet V 2.4.

Essential Student Learning Items (Revenue) 3,000

Optional Items (Revenue) 2,000
 5,000

4.4 GST on Sales

This account is calculated automatically and represents the GST collected on Sales
(Liability Account) during the current period. Each time an item is sold the purchase price
will incur GST which must be paid to the ATO. This account calculates the running total
of the GST collected.

For example, students are invoiced a total of $880 (GST inclusive) for the food
component of a camp.

Debit (Dr) Credit (Cr)

Accounts Receivable (Asset) 880

Camps and Excursions (Revenue) 800

80
GST on Sales (Liability) 80

This value is used in the BAS calculation for the period.

5. Non-Current Liabilities
Non-Current Liabilities are those liabilities that are not specifically related to the current
period, that is, they are debts that the school has to pay that span a timeframe greater
than the current accounting period. A Cooperative Loan account is the best example of a
Non Current Liability.

6. Report Certification
The parameters for the Balance Sheet include the option to print a certification page.
This should be printed for the final Balance Sheet at the end of period, signed and filed
for audit purposes.

11
Balance Sheet V 2.4
 Department of Education and Training
CASES21 Finance

http://www.education.vic.gov.au/school/principals/finance/Pages/cases21.aspx