Acquisition Cost - Cost of a piece of equipment including calibration, installation, freight, trade-in and sales and excise tax.

Allocable Cost - A cost is allocable to a recharge center activity if it is chargeable or assignable to that activity according to the relative benefits received or other equitable relationship.

Allowable Cost - Costs included in the rate proposal must be allowable in accordance with OMB A-21. The tests of allowability are that costs must be reasonable, allocable to the recharge activity, and consistently treated.

Amortization - See Use Allowance or Depreciation.

Auxiliary Enterprise - A large, university-wide unit that provides services primarily to external users. An example of an auxiliary enterprise is University Parking Services.

Billable Units - The number of units of activity that are expected to be sold in a given time period. Common units are number of hours, number of tests, or number of users.

Capital Lease - A capital lease is a lease that transfers substantially all the benefits and risks inherent in the ownership of property to the University. The criteria for a capital lease can be found at the State Administrative and Accounting Manual website.

Cash Sales - Sales to external users that pay with cash, check, or credit card.

Cost Center - An organizational unit or activity that provides goods and services primarily to internal university operations. Cost centers charge less than $175,000 annually to federally sponsored programs AND less than $1,000,000 in total charges.

Cost Transfer Invoice (CTI) - A mechanism to move costs of services or supplies between budget entities at the University. A CTI is also used by non-proprietary fund budgets, such as departmental revenue or program income budgets, to record a sale. The Cost Transfer Invoice (CTI) Web page provides additional information. Also see internal sales document.

Deficit - Occurs when expenditures are greater than revenue and beginning fund balance. Ordinarily, deficits should be incorporated into the next year's rate proposal.

Departmental Revenue Budget - A type of budget that provides services primarily to external users. A departmental revenue account is usually smaller than an auxiliary enterprise and more directly related to the core functions of instruction, research, and public service. An example of a departmental revenue account is the Radiology Revenue Account.

Equipment - A tangible asset, including software, with a life expectancy of more that one year and a cost of $5,000 or more (for recharge and cost centers).

Equipment Class - Defined by the state to categorize different types of equipment and their useful lives. The equipment classes and their useful lives are found at the State Administrative and Accounting Manual website.

Equipment Depreciation - A method to recover the cost of equipment costing more than $5,000. Annual depreciation is calculated with the formula: (acquisition cost - residual value) / useful life. Also see Equipment Use Allowance.

Equipment Reserve Budget - A budget used to purchase equipment costing more than $5,000 and to record depreciation or use allowance of that equipment. An equipment reserve account is required to include equipment depreciation or use allowance in recharge rates.

Equipment Use Allowance - A method used to recover the cost of equipment costing more than $5,000. The annual use allowance is calculated with the formula: acquisition cost * 6.67%. The use allowance can be taken until the acquisition cost is recovered. Also see Equipment Depreciation.

External User - Also called outside user. Any customer not using a UW budget number for payment. Also see Internal User.

Facilities & Administrative (F&A) Cost - Costs, formerly called indirect costs, that are incurred for common or joint objectives, and, therefore, cannot be identified readily and specifically with a particular activity. For more information contact MAA

FASTRANS - A system by which recharge and cost centers can issue internal sales documents automatically into the financial accounting system (FAS). Contact MAA to receive an Excel template to facilitate the use of FASTRANS. Additional information is provided at the FASTRANS website.

Fund Balance - The fund balance is calculated by taking revenues less expenditures and adjusting for any revenues or costs that have occurred, but have not yet recorded on the budget (accruals).

General Operating Fund Budget - A budget funded from the state general fund and student operating fees used to pay general operations of the University.

Indirect Cost - See Facilities & Administrative Cost.

Institutional Overhead - Rate calculated by the Budget Office to reimburse the University for costs paid centrally such as rent, light & heat, etc. Institutional overhead is charged on all sales to external users. See Administrative Policy Statement D33.2 for additional information.

Internal Sales Document (ISD) - Used exclusively for recording the sales of services or products by recharge or costs centers and auxiliary enterprises to other University entities. The Internal Sales Document (ISD) Web page provides additional information. Also see Cost Transfer Invoice (CTI).

Internal User - Also called inside user. Any customer who pays with a UW budget number is considered an internal user. Also see External User.

Internal User Rate - The rate charged to internal users, it cannot exceed the cost of providing the goods or service.

Inventory Budget - Used by recharge or cost centers that have inventories of $25,000 or more at fiscal year end. The inventory account is a separate budget from the operating account that is used to record the annual change in inventory. An example of a center with an inventory account is a stores center.

OASIS - The university's equipment inventory database. The information (equipment cost, tag #, etc.) in OASIS should match the recharge or cost center depreciation or use allowance schedule. Additional information is provided at the OASIS website.

OMB Circular A-21 - Office of Management and Budget (OMB) federal circular that establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions.

Operating Budget - The recharge center or cost center's main budget used to record the revenue and expenditures associated with providing the center's goods or services.

Operating Lease - a rental of an asset over a term of more than one year that doesn't meet the definition of a capital lease.

Program Income Budget - A type of budget that generates revenue as a result of a research activity and is tied to a specific grant or contract. These types of activities require prior approval from the agency that sponsored the original research. An example of a program income activity is the Primate Center Program Income Account.

Reasonable Cost - A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved reflect the action that a prudent person would have taken under the circumstances.

Recharge Center - An organizational unit or activity that provides goods and services primarily to internal university operations. Recharge centers charge more than $175,000 annually to federally sponsored agreements OR more than $1,000,000 in total charges.

Residual Value - The value of a piece of equipment at the end of its useful life.

Sale - Recorded when goods or services are provided to others and the original nature of the costs have changed. With a sale, a rate is developed and billed as one unit. An example of a sale is when an instrument shop manufactures instruments used in research. The billed amount to users includes salaries, service contracts, supplies, and perhaps equipment depreciation which are the inputs into the final product or service. Also see Transfer.

Sales Tax - State tax on sales to external users for sales of "tangible personal property" and some services.

Surcharge - Additional amount charged to non-UW, non-federal users in excess of internal rate, not including sales tax or institutional overhead.

Surplus - Occurs when revenues are greater than expenditures in excess of the working capital amount. Ordinarily, surpluses in excess of the working capital amount should be incorporated into the next year's rate proposal.

Transfer - A means to allocate costs to different budgets through pro-rating or apportionment of actual benefit received. A cost transfer is used when the nature of the activity/costs has not changed from one entity or another or when costs are transferred in the categories in which they are charged (e.g. salaries, supplies, etc). An example of a cost transfer is copier expense charged to one budget and allocated to all benefitting budgets. Also see Sale.

Unrelated Business Income Tax (UBIT) - A tax to which the recharge or cost center may be subject. This occurs when external users are charged more than cost AND the activity is a trade or business, it is conducted regularly, and it is not substantially related to the university's exempt educational or scientific purposes.

Unallowable Costs - Costs defined in section J. of OMB Circular A-21 as unallowable, which cannot be included in recharge rates.

Useful Life - The number of years equipment costing more than $5,000 is expected to be in use. The useful life is employed in the annual depreciation calculation. Most commonly, the useful life defined by the state is used for the calculation. The equipment classes and their useful lives are found at the State Administrative and Accounting Manual website.

Working Capital -An amount up to 60 days of expenditures to ensure the recharge center can fund operations during fluctuations of revenue and expenditures.

Management Accounting and Analysis
A department of Financial Management
Modified: July 24, 2008