PRIVATE EDUCATIONAL INSTITUTIONS

Activities in a Private educational institutions

1. Instructional – something to do with teaching; e.g., during the pandemic, teachers do their lecture online
2. Administrative – offices/departments
3. Auxiliary – canteens/food courts

Funds
PEI use Fund accounting
Fund Accounting – there is a separate fund established for a specific purpose and the fund is an independent accounting
entity having its own self balancing accounts

1. Current Funds
this is similar to the Regular agency fund (01…)
a. Unrestricted Current Funds
This kind of current funds are available for use, usually this is to be used for the payment of salaries,
utilities and the like.
b. Restricted Current Funds
It is restricted, it has specific purpose; e.g. the fund is restricted for enrollment purposes, so this
particular fund set aside from the unrestricted funds will be used only to defray expenses for enrollment
purposes; or for the convocation of the newly passed CPAs; or the invocation of the new lawyers
2. Loan Funds
These funds are used for the students, teachers or for nonteaching staffs; funds used to be borrowed by students,
teachers, faculty nonteaching staff, or office staffs
These is subject to payment
3. Endowment and Other Nonexpendable Funds
E.g. there is an asset or property in the University and are in the Endowment fund, these assets or properties will be
expected to generate income. If it is an endowment fund only the income it generated will be use for the purpose
intended. The asset or property are nonexpendable (not to be consumed/used), it can only be used to generate income
for the use of the University.
4. Annuity Funds
This is a kind of fund which will be used to pay the beneficiaries in the future. In annuity, there are expenses paid every
year. This can be, for example, a credit/debt of the University that should be paid every year.
5. Plant Funds
a. Unexpended Plant Funds
The funds which will be used to purchase other plant facility or other PPE
b. Retirement of Indebtedness Funds
In the acquisition of Plant funds, there are instances that it will be through cash or a liability. The funds which
are to be used to pay the debt for the acquisition of plant funds will be here in the retirement of indebtedness
funds, it was transferred so not to be used. Because if it is in the Unexpended funds, it will possibly be used to
purchase another kind of PPE. But if it’s in the RIF, it is segregated and cannot be used to purchase another kind
of PPE.
c. Invested in Plant section
When the PPE acquired through credit which have set aside in RIF, was paid using retirement of indebtedness
funds, once paid or even partial payment it will be placed in Invested in Plant section. The invested in plant
section are those particular funds containing the specific resources of the plant – buildings, machinery of school.
For example, the new buildings of Ateneo if it’s still not paid then it cannot be placed in Invested in Plant section.
If there’s a money set aside for its payment, then it is categorized as or considered RIF. If Ateneo is planning to
purchase additional equipment for another course for example, if it’s still only a plan then it is categorized for
the meantime in Unexpended Plant Funds.
6. Agency Funds
 A particular fund is put up as an agency fund, and the private university college or school is considered as an agent who
is responsible to pay the payee.

>>> Lecture 2

Educational and General Revenues of PEIs

1. Student Tuition and Fees

2. Governmental Grants and Contracts/Endowment Income
E.g. Before, CSC has a program granting government employees to take up a master’s degree, they called this the Local
Scholarship Program. With this, the CSC transfers funds/an amount of money to a particular private school. Ateneo was
one of the schools that was used by Civil Service Commission for its Local scholarship program. The purpose of the funds
was to defray for the tuition fees of government employees who are finishing their master’s degree at AdDU.
3. Gifts and Private Grants
There are private companies who provide gifts or grants to private institutions, the grant or gift could be for the purpose
of or can be used, for example, to further any educational activities or a gift for the construction of a building for the
Science and technology courses.
4. Sales and Services – Educational Departments
An example is the bookstores of the universities. To avoid students visiting other bookstores, the University will purchase
the books, which will then be sold to students by the University’s bookstore. Or if there are books written or reference
materials written by the faculty for a specific subject in the university, the sale of this will be taken care of by the
university bookstore. Thus, Sales and services are part of an educational department.
5. Income from Organized Activities Relating to Educational Departments
Organized activities  feasibility studies. There are instances before or even today that University faculties are being
commissioned by private companies to conduct feasibility studies. Then the private entities will pay the school for the
services of the faculty conducting the feasibility studies.
6. Income from Other Sources
Example of this is the canteens/food courts (auxiliary). It is considered other services because PEIs are not business
oriented, its main mandate is, of course, educational institution.

Expense Sub-Classification

1. Institutional Support – General Administration

Those expenses for the administration of the university. SBG, for example, has a budget for its expenses, these budgets
once expended/spent, its classification is in the Institutional Support – General administration. Because SBG is one of the
Institutions in the Ateneo.
2. Student Services/General Expenses
E.g., although the expenses to run the OSA (student services) is considered general administration, but the activities that
it supervises for the students will be considered Student services or General expenses. An example of that is the
Intramurals.
3. Instruction and Departmental Research
The expenses in relation to the conduct of the feasibility study (in Income from Organized Activities) is to be recognized
as Instruction and Departmental Research part of the expenses sub-classification of a PEIs.
4. Academic Support – Organized Activities relating to Educational Departments (Libraries)
E.g., the Libraries are a support service to the academic activities of the PEIs.
5. Organized Research
For other departments, e.g., Science and Technology research which are to be conducted in Natural sciences
departments.
6. Extension and Public Services
An example is the exposure in FYDP, the first-year students are being sent to the squatters for emersion to be able to feel
the life of those living in the slum areas.
7. Public Support (conferences, seminars, consulting)
E.g., there was a seminar before conducted by the secretary now of department of education regarding PDAF and DAP
issues. That is a public support because it is an information drive for the information of the public.
 8. Operation and Maintenance of the Physical Plant
Physical plant  Buildings, comfort rooms within the university, halls, elevators and the like. The operation and the
maintenance of these is an expense on the part of the universities and to be considered as part of the operation and
maintenance of the physical plant.

>>> Lecture 3

Relationship of Some Journal Entries as Recognized in the Different Funds of a PEIs

Unrestricted Current Fund

The mortgage payable is in the Invested plant section. That’s why in the Invested in Plant books there is a
transaction that the payment by retirement of indebtedness funds of current installment due on mortgage,
25,000.
*Mortgage Payable (Invested in Plant) - Since the mortgage is carried in the Invested in Plant (credited) before,
by the time it will be paid Mortgage payable will be debited.
This particular payment decrease in Liabilities will have a corresponding increase in Equity account (Invested in
Plant – from Current Funds) which is why it is credited.

So, if there is a credit in the account Investment in Plant – from Current Funds (in Invested in Plant books), there
is also a corresponding debit of Current Unrestricted Net Assets account. So, we are deducting/reducing the
current unrestristed net assets in the Unrestricted Current Funds.
A credit to the Investment in Plant account will have a debit to the Current Unrestricted Net Assets account in
the Unrestricted Current Funds amounting to 25,000.
If we are going to analyze, in simple accounting/simple journal entry, debit mortgage payable and credit cash. So
the Mortgage payable is debited in the Invested in Plant and then the credit for this is in Cash kay nag bayad
man si Unrestricted Current. A decrease in a liability (Mortgage payable) will increase an equity account
(Investment in Plant – from Current Funds). Therefore the account Invested in Plant has the characteristic of an
equity account in the Invested in Plant section of the Plant Funds.

Payment of interest on current and long-term indebtedness – Since that is payment of current and long term
debt and it is not sure if it is for PPE, so it is recorded in the Unrestricted Current Fund. So, we debit General
Expense 100,000.
>>> Lecture 4

Unrestricted Current Fund

Naturally, all acquisitions of PPE is in Invested in Plant Section, but in this case the money use to acquire such
equipment is in the Unrestricted Current Fund.

So in Unrestricted Current Funds, nag bayad si Unrestricted so that is why there is a credit to Cash. Now, in
ordinary accounting this is debited to an equipment account (PPE), but since the PPE accounts are to be
recorded/carried in the Invested in Plant section so we cannot use it as a debit account in the Unrestricted
Current Funds. So our debit is we are going to deduct/reduce the Net assets of the Unrestricted current fund
and the account title for that is Current Unrestricted Net Assets (si Unrestricted ang nag bayad) and then we
credit Cash.

Since the asset is to be carried in Invested in Plant section, there is a debit to the account Equipment. And since
there is an increase in Asset, this has also a corresponding increase in the Equity account in the Invested in Plant
(Investment in Plant – from Current Funds).

So from the Unexpended Plant Funds it will be transferred to Plant renewals and replacements.
The Unrestricted Current Funds transferred funds to Unexpended Plant Funds, which is why it credited Cash
while the Unexpended Plant Fund debited Cash.
Now, since the Unrestricted transferred cash, so the fund has to decrease the Net Assets that’s why we debit
Current Unrestricted Net Assets.
Now on the part of Unexpended Plant Fund, it received a cash and the responding entry to the debit of current
unrestricted net assets will be a credit to the Equity account of the Unexpended Plant Fund which is
Unexpended Plant Fund Balance – renewals and replacements.