The document provides an overview of basic accounting concepts for members of the Denver Metro Chamber of Commerce. It discusses key accounting rules like GAAP, entities, tax status, and financial statements. It explains how these rules apply specifically to the Chamber's operations and outlines departments' responsibilities to ensure accurate financial reporting through processes like budgeting, purchase orders, and using proper account codes. The presentation aims to help members and staff understand accounting practices while also making accountants' jobs easier through organization, documentation, and adherence to procedures.

1. Accounting Basics
November 17, 2006
Denver Metro Chamber of
Commerce

2. Why Are You Here?
To Get a Basic Understanding of
Accounting
To Get an In-Depth Understanding
of Accounting as Practiced by the
Chamber

3. How Does She Know
This Stuff?
BS Finance
8 Years Chamber Controller
15 Years Controller for
Membership Organizations
18 Years Accountant for Not for
Profits
200 Years Accounting Experience

4. What Are We Going to
Cover?

Accounting – Basic Rules and
Concepts

How Those Rules and Concepts
Apply to the Chamber

How YOU Ensure Good Financial
Reporting

5. Why Accounting?
It’s the Language
of Business
It’s How Activities
are Measured
It’s How Results
are Communicated

6. Accounting – Basic
Rules and Concepts I
GAAP
Generally Accepted Accounting
Principles
Entities
Proprietorship, Partnership,
Corporation
Tax Status
Cash v. Accrual Accounting

7. Accounting – Basic Rules and
Concepts II
Objectivity
Conservatism
Consistency
These are the CARDINAL RULES of
Accounting.

8. Accounting – Basic Rules and
Concepts II
Objectivity
“there must be reasonable and
verifiable evidence to support any
transaction”
Conservatism
“when in doubt, be conservative”
Consistency
“in order to know where we are, we
have to know where we were before”

9. Accounting – Basic
Rules and Concepts III
Financial Statements
Balance Sheet
Income Statement

10. Accounting – Basic Rules and
Concepts III
Assets (what you own)
- Liabilities (what you
owe)
= Equity (what you’re
worth)
Financial Statements -
Balance Sheet
Historical, Long Term
Document
These always have to
balance - double entry
bookkeeping

11. Denver Metro Chamber Of Commerce and Metro Denver EDC
Balance Sheet
August 31, 2006
Audited
831/2006 8/31/05
EDC DMCC TOTAL TOTAL
ASSETS
Current Assets
Cash and Short Term Savings 3,038,117 1,820,627 4,858,744 2,957,578
Long Term Investments 0 1,006,681 1,006,681 699,205
Building Reserve 0 254,146 254,146 253,792
Total Cash and Investments 3,038,117 3,081,454 6,119,571 3,910,575
Receivables
Membership Dues (net of Allowance) 0 159,923 159,923 386,882
Related Entities 0 16,179 16,179 (200,490)
Other 0 33,576 33,576 16,974
Total Receivables 0 209,678 209,678 203,366
Other Assets
Notes Receivable 0 7,000 7,000 64,336
Prepaid Expenses 0 417,895 417,895 145,200
Total Other Assets 0 424,895 424,895 209,536
Property & Equipment less Acc. Depr. 54,642 2,687,290 2,741,932 2,692,561
TOTAL ASSETS 3,092,759 6,403,317 9,496,077 7,016,038
LIABILITIES AND NET ASSETS
Current Liabilities
Accounts Payable 0 125,648 125,648 173,086
Payroll Liabilities 0 627,545 627,545 520,216
Advances/Other 0 0 0 10,562
Total Current Liabilities 0 753,193 753,193 703,864
Other Current Liabilities
Deferred Dues less Deferred Commissions 0 1,058,320 1,058,320 1,488,096
Other Deferred Income 1,700,000 231,843 1,931,843 109,745
DMCC/EDC Intercompany 0 0
Total Other Current Liabilities 1,700,000 1,290,163 2,990,163 1,597,841
Total Liabilities 1,700,000 2,043,355 3,743,355 2,301,705
Net Assets
Fund Equity - Prior Years 567,501 4,145,632 4,713,132 3,950,691
Net Profit / (Loss) 412,373 627,216 1,039,589 763,642
Total Net Assets 979,874 4,772,848 5,752,721 4,714,333
TOTAL LIABILITIES & NET ASSETS 2,679,874 6,816,203 9,496,076 7,016,038

12. Accounting – Basic Rules and
Concepts III
Revenue or Income ($
IN)
- Expenses ($ OUT)
= Net Income (the
Bottom Line)
Financial Statements -
Income Statement
Dynamic, Short Term
Document
Links with the Balance
Sheet - Net Income is
Equity

13. Denver Metro Chamber Of Commerce
Income Statement - Executive Summary
For the Twelve Months Ending August 31, 2006
Curr. Period Curr. Period YTD YTD (Over)/Under (Over)/Under Annual
Actual Budget Actual Budget Year to Date % Budget
REVENUE
Membership Dues 368,198.38 311,536.00 4,060,709.35 3,744,000.00 (316,709.35) -8% 3,744,000.00
Administrative Income 284,644.31 255,950.00 380,283.43 322,110.00 (58,173.43) -18% 322,110.00
Member Services Income 470.00 0.00 66,220.00 62,345.00 (3,875.00) -6% 62,345.00
Corporate Communications 13,066.66 200.00 27,276.66 18,500.00 (8,776.66) -47% 18,500.00
Events Income 20,752.06 31,000.00 459,381.62 402,825.00 (56,556.62) -14% 402,825.00
Metro Denver EDC Income 0.00 320,600.00 242,825.21 525,600.00 282,774.79 54% 525,600.00
Marketing Sales & Service 37,855.66 8,620.00 237,364.47 189,650.00 (47,714.47) -25% 189,650.00
Business Resource Ctr Income 27,280.42 3,000.00 67,284.43 38,000.00 (29,284.43) -77% 38,000.00
Public Affairs Income 129,710.00 46,150.00 300,592.97 416,825.00 116,232.03 28% 416,825.00
TOTAL REVENUE 881,977.49 977,056.00 5,841,938.14 5,719,855.00 (122,083.14) -2% 5,719,855.00
EXPENSE
Payroll Expense 683,911.27 249,822.00 3,213,106.00 2,938,300.00 (274,806.00) -9% 2,938,300.00
Administrative Expense 152,085.37 125,599.99 838,049.31 804,465.00 (33,584.31) -4% 804,465.00
Member Services Expense 2,089.27 775.00 23,383.77 23,500.00 116.23 0% 23,500.00
Corporate Communications 5,552.30 2,500.00 75,381.45 81,152.07 5,770.62 7% 81,152.07
Events Expense 16,602.36 2,700.00 181,581.49 159,600.00 (21,981.49) -14% 159,600.00
Metro Denver EDC Support 82,442.91 264,600.00 644,465.83 942,154.43 297,688.60 32% 942,154.43
Marketing Sales & Service 74,051.00 61,500.00 189,226.07 183,100.00 (6,126.07) -3% 183,100.00
Business Resource Ctr Expense 21,000.66 1,600.00 29,105.71 20,000.00 (9,105.71) -46% 20,000.00
Public Affairs Expense 56,054.74 98,125.00 272,787.28 513,301.48 240,514.20 47% 513,301.48
TOTAL EXPENSE 1,093,789.88 807,221.99 5,467,086.91 5,665,572.98 198,486.07 4% 5,665,572.98
NET INCOME FROM OPERATIONS (211,812.39) 169,834.01 374,851.23 54,282.02 (320,569.21) -591% 54,282.02
1445 Market Street Dividend 150,000.00 150,000.00 252,364.49 150,000.00 (102,364.49) -68% 150,000.00
NET INCOME (LOSS) (61,812.39) 319,834.01 627,215.72 204,282.02 (422,933.70) -207% 204,282.02

14. How Those Rules and Concepts
Apply to the Chamber
GAAP
Annual Audit
Cash v. Accrual
Accounting
Match Income with
Expense
Match Income with
Period

15. How Those Rules and
Concepts Apply to the
Chamber
Entities
Proprietorship, Partnership,
Corporation
Tax Status
THE CHAMBER, THE FOUNDATION
AND 1445 MARKET STREETS ARE
NOT-FOR-PROFIT
CORPORATIONS

16. Tax Status
• Federal Income Tax
501 (c) 6 – DMCC
501 (c) 3 – DMCF
501 (c) 2 – 1445
• State and Local Sales Tax
Only 501 (c) 3 is exempt
• Property Taxes

17. How Those Rules and Concepts
Apply to the Chamber
THE CHAMBER IS A
MEMBERSHIP
ORGANIZATION.
As a Membership
Organization, we have a
Fiduciary Responsibility to
our Members.
fiduciary - “a person
to whom property is
entrusted for the
benefit of others”
responsibility –
“answerability or
accountability”

18. How Those Rules and Concepts
Apply to the Chamber
Objectivity
 There must be documentation for
everything we do
 The documentation has to be accurate
Conservatism
 Accounting people will not make
assumptions on your behalf
 Accounting people abhor, detest and
despise emergencies

19. How YOU Make Accounting
Happen
INCOME (REVENUE)

Create an invoice in
database

When it’s paid,
accounting records
the income (Income
Statement)

Income might be
deferred (Balance
Sheet)
EXPENSE

Order something
(supplies, catering,
pencils)

Write up a PO

When the bill is
ready to be
paid,accounting
records the expense
(Income Statement)

20. How Accounting Rules Make
Your Life Miserable
Purchase Orders
 There must be
documentation for
everything we do
 The documentation
has to be accurate
Objectivity

21. How Accounting Rules Make
Your Life Miserable
Purchase Orders
 Accounting people
will not make
assumptions on
your behalf
 Accounting people
abhor, detest and
despise
emergencies
Conservatism

22. How Accounting Rules Make
Your Life Miserable
Cash Receipts
 All Cash Receipts
and Credit Card
payments must have
a Account Number
written on them
Objectivity

23. Account Numbers!!
The list is called the Chart of
Accounts
There are three sections
1. Department
2. Account
3. Extension

24. More about Account Numbers!
Departments
1. 000 through 900
2. You can only
code stuff to
your own
department
3. To get detailed
reports, we ask
for specific
departments
Accounts
1. The most
important one!
2. 4xxx = Revenue
3. 5xxx-9xxx =
Expense
4. Get this wrong
and we kick it
back to you!

25. Two Additional Very
Important Concepts
TIMELINESS
The “pay up bum”
issue

26. Two Additional Very
Important Concepts
ACCURACY
The
Corporate
Concepts
mistake

27. How YOU Ensure Good
Financial Reporting
Bottom-Up Approach
Budgeting
 Departments create their own budget
 Departments are accountable based on those
budgets
Purchase Orders
Departments write up their own POs
Financial Reports are based on those POs

28. One More Thing…
Only Joe Blake, Robert
Blankenship, or Tom Clark can
sign contracts for the Chamber
Authority is delegated this way:
Members > Board > Executive

29. What Are Accountants Like?
We like Order and
Organization
We enjoy Processes
We like Schedules
We don’t like Surprises
We can’t really be
Creative

30. How to Make Accounting Happy
Fill out those POs completely and accurately
Objectivity, Conservatism

Use the correct account numbers
Accuracy

Turn in your POs and cash receipts promptly
Timeliness

31. How to Make Accounting Happy
Use the forms on the Infomall
Ask us if you aren’t sure
When you ASSUME, you make an
ASS out of U and ME

Maintain the records you need to stay on top
of your budget
Accounting information is Historical information

32. What Accounting Will Do For
YOU
Pay your vendors on time
Jump in if you have problems with
vendors or members
Get you timely and accurate
information
Encourage to be creative in
everything except our stuff
Celebrate your successes!

33. Bottom-Up Approach – It’s Up
to You
The Chamber, EDC, Foundation and Market
Street staff are an exceptionally talented group
of people. We are proud to be working with you.
Please understand that the accounting
department has constraints you may not see.
Your cooperation is vital to the “accountability” of
the organization.
Thank you so much for your concern, efforts and
consideration.

34. Questions
All Questions are
Good Questions!
Comments and
Rebuttals are also
Welcome (kind of)