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SayPro Provide a list of common financial terms used in the preparation of a project budget for academic services

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Written by

Dorah Lerato Radebe

in

Common Financial Terms

  1. Allocation:
    • The amount of money designated for a specific purpose within the budget. This can be for departments, projects, or specific expenses.
  2. Encumbrance:
    • Funds that have been committed to specific expenses but not yet spent. This includes salary commitments, purchase orders, and contracts.
  3. Direct Costs:
    • Expenses directly attributable to a specific project, such as salaries, materials, and travel costs.
  4. Indirect Costs:
    • Also known as overhead costs, these are expenses not directly tied to a specific project but necessary for overall operations, such as utilities and administrative salaries.
  5. Carry Forward:
    • Unspent funds from the previous fiscal year that are carried over to the current year. This can be used for ongoing projects or unexpected expenses.
  6. Contingency Fund:
    • A reserve of money set aside to cover unexpected expenses or emergencies.
  7. Variance:
    • The difference between budgeted amounts and actual expenditures. Positive variance indicates underspending, while negative variance indicates overspending.
  8. Cash Flow:
    • The movement of money in and out of the organization. Positive cash flow means more money is coming in than going out, while negative cash flow indicates the opposite.
  9. Revenue:
    • Income generated from services, grants, or other sources. This is the money coming into the organization.
  10. Expenditure:
    • Money spent on various costs, including salaries, materials, and operational expenses.
  11. Budget Revision:
    • Adjustments made to the budget based on changes in project scope, unexpected expenses, or new funding.
  12. Fiscal Year:
    • The 12-month period used for accounting purposes. It may not align with the calendar year.

Example Usage

  1. Allocation: The academic writing services department has an allocation of R500,000 for the fiscal year.
  2. Encumbrance: The department has an encumbrance of R100,000 for ongoing contracts.
  3. Direct Costs: Direct costs for the project include R200,000 for salaries and R50,000 for materials.
  4. Indirect Costs: Indirect costs such as utilities and administrative salaries amount to R80,000.
  5. Carry Forward: The department has a carry forward of R50,000 from the previous year.
  6. Contingency Fund: A contingency fund of R20,000 is set aside for emergencies.
  7. Variance: The project has a positive variance of R10,000, indicating underspending.
  8. Cash Flow: The department has a positive cash flow, with R300,000 in revenue and R250,000 in expenditures.
  9. Revenue: Revenue from academic writing services totals R300,000.
  10. Expenditure: Total expenditures for the project are R250,000.
  11. Budget Revision: A budget revision was made to allocate an additional R30,000 for unexpected travel expenses.
  12. Fiscal Year: The fiscal year runs from April 1 to March 31.
  • Neftaly Malatjie | CEO | SayPro
  • Email: info@saypro.online
  • Call: + 27 84 313 7407
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