Accounting Classification Systems by Joseph Tramontana
Accounting classification systems are ways to collect financial data during the actual operation of the government or school district. The data, once collected, can be organized in a way that anyone can understand the financial condition of the district.
The classification of data is called Chart of Accounts. The Chart of Accounts is a road map, and its purpose is to find data easily. The minimum chart of accounts means that every school district must report the same expenditure the same exact way, so data can be easily compared on a statewide basis. The best way to learn the process is by example. The major expenditure classifications are as follows: Fund, Program, Object and Function.
General Fund (Current Expense) This Accounts for all expenditures of the district for current expenses including instruction.
The program classification describes the program and accounts for all related expenses for a particular program including instruction costs.
The purpose of the function classification describes the activity that is being done and in this example the activity is instruction.
The purpose of the object classification is to describe the service obtained as the result of a specific expenditure. In this example, the service obtained is instructing students.
If you wanted to know the total amount spent in salaries for kindergarten teachers, it would look something like this.
11-110-100-101. The 11 will always account for the current expense. The 110 is a program and in this example the program is Kindergarten. The function or activity in this case is instruction, and the instruction classification will always be 100. Finally, the object or result of our expenditure are teacher’s salaries. The code for teacher salaries will always be 100 broken down in subcodes. In this example, all Kindergarten teachers were listed in 101.
In conclusion, all across the State of New Jersey use the same accounting classification systems and you will find the salaries of Kindergarten teachers located in the same account and classified as 11-110-100-101.