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GLOSSARY OF TERMS
Account –
A separate financial reporting unit
for budgeting, management, or accounting
purposes. All budgetary transactions, whether
revenue or expenditure, are recorded in accounts.
Accounts Payable –
A short term liability
account reflecting amounts owed to private
persons or organizations for goods and services
received by the Town.
Accounts Receivable –
An asset account
reflecting amounts due from private persons or
organizations for goods and services furnished by
the Town.
Accrual Basis –
The recording of the financial
effects on an entity of cash transactions in the
periods in which they occur rather than the
periods in which the cash is received.
Ad Valorem Taxes –
Commonly referred to as
property taxes, are levied on the value of real,
certain personal, and public utility property
according to the property’s valuation and tax rate.
Adopted Budget –
The budget approved by the
Town Council and enacted through a budget
ordinance adopted on or before June 30 of each
year.
Appropriated Fund Balance -
The amount of
fund balance budgeted as revenue to offset
expenses that exceed current revenue.
Appropriation –
This is the legal authorization
granted by the Town Council to expend or
obligate funds for specific purposes. An
appropriation usually is limited in the amount
and time that it may be expended. The Council
appropriates annually, at the beginning of each
fiscal year, by department, based upon the
adopted Budget. Additional appropriations may
be approved by the Council during the fiscal year
by amending the Budget and appropriating the
funds for expenditure.
Assessed Value –
The value of real estate or
personal property as determined by the Wake
County Tax Assessor as a basis for levying
property taxes.
Asset –
A probable future economic benefit
obtained or controlled by the Town as a result of
past transactions or events.
Audit –
An examination, usually by an official or
private accounting firm retained by the Town
Council that reports on the accuracy of the annual
financial report.
Authorized Positions -
Employee positions
that are authorized in the adopted budget to be
filled during the fiscal year.
Balanced Budget –
Occurs when planned
expenditures equal anticipated revenues. In
North Carolina, it is a requirement that the
budget submitted to the Town Council be
balanced.
Basis of Accounting & Basis of Budgeting
–
The system under which revenues, expenditures,
expenses, and transfers – and the related assets
and liabilities – are recognized in accounts and
reported in financial statements. It specifically
relates to the timing of the measurements made.
Bond
– a written promise to pay a designated
sum of money (the principal) at a specific date in
the future, along with periodic interest at a
specified rate. The payment on bonds is
identified as Debt Service. Bonds are generally
used to obtain long-term financing for capital
improvements.
Bond Rating
– A grade indicating a
governmental unit’s investment qualities.
Generally speaking, the higher the bond rating,
the more favorable the interest rate and the lower
the cost of financing of capital projects funded by
bonds. A high rating is indicative of the
government’s strong financial position.