Final Exam

Question 1

Be familiar with the term Christian Stewardship and the importance of preaching about stewardship.

Answer 1

Christian Stewardship- concerns our responsibility to live wholly for God, managing our resources to give him glory and benefit humanity

Preaching stewardship- Preach confidently, Preach carefully, Preach creatively, Preach centrally, Preach consistently

Question 2

How does Stewardship benefit the church?

Answer 2

It takes care of the church and helps to also benefit everyone in the process

Question 3

Define Stewardship

Answer 3

The use and care of our natural resources; includes what we do with abilities and talents; it involves the way we manage our time.

Question 4

The biblical view of stewardship is a way of growing in Christ and is an important part of ongoing church life

Answer 4

True

Question 5

Understanding the phrase “Internal Control” also in Jamieson and Jamieson

Answer 5

is accounting jargon for a checks-and-balances system to prevent stealing.

Question 6

Parts of a Balance Sheet (Statement of Financial Position)

Answer 6

Statement of Financial Position is referred to as the balance sheet. This statement provides a snapshot of the church’s financial picture on any given date

Question 7

Financial Reporting Basic Concepts

Answer 7

Assets- current assets are cash and any other assets or resources that can be converted into cash in a short time

Liabilities- obligations the church has to others

Net assets- shows the difference between an organization’s assets and its debts or liabilities

Statement of activities- shows how much income was received and what the expenses were for a given period

Statement of cash flows- outlines the change in cash during the reporting period

Budget financial statement- an expanded income statement that is used to compare actual income and expenses to their budgets

Question 8

Ministry priorities versus budgeting

Answer 8

We have to understand the actual values of a congregation before we can effectively influence the budget process. Often the budget is the best indication of what the leadership values.

Question 9

Fiduciary responsibility

Answer 9

When church members become part of the church’s governing board, they become representatives of the corporation and must act in the church’s best interests:

Good Faith- perform their responsibilities in good faith and manner they believe to be in the best interests of the corporation

Loyalty- generally requires that any transaction between the board and its directors be (a) fully disclosed, (b) approved by the board without the vote of the interested director, and (c) fair and reasonable to the corporation

Question 10

Cash Flow Terms

Answer 10

Plot income- show when we receive money and how much we took in

Plot expenses- simply add up the expenses for each month and connect another set of points on the graph

Look for variations- look for high-and low-income months, seasonal periods of greater spending, points at which income is low and spending is high, and vice versa

Project next year’s graph- using data from the three-year historical graph, we can hazard estimates of the coming year’s income and expenses

Question 11

Internal Audits

Answer 11

Churches may need to have their financial records audit because of stewardship, reputation, protection of assets, and record updating.

The audit committee examines four main areas: income, expenses, record keeping, and reporting.

Watching income- an audit establishes that all monies received are properly handled

Examining expenses- there are four areas that concern the auditors

Checking record keeping- the auditors next follow a number of procedures to satisfy themselves that the records are properly maintained

Watching reporting- this part of the audit checks the accuracy of the treasurer’s reports and budgets and looks for ways to improve them

Presenting the report

Question 12

Spending controls

Answer 12

Three key elements for controlling the disbursement of church funds:

(1) The person who approves purchases should not prepare checks for payment
(2) The individual who prepares the checks should not be authorized to sign them
(3) The person authorized to sign checks should not be the person who approves purchases or payments

Question 13

Monthly Reports

Answer 13

Cash activity summary
Fund activity report
Trail balance report

Question 14

Bank Reconciliation

Answer 14

comes directly from the bank statement

Question 15

Balance Sheet

Answer 15

reports we get from Shelby or serenic provides a summary of expenses and incomes

Question 16

Income & Expense Report

Answer 16

what money you brought in and money you put out

Question 17

Accrual Basis

Answer 17

The accounting method under which revenues are recognized on the income statement when they are earned (rather than when the cash is received).

Question 18

Budgeting Purposes/Definition

Answer 18

a plan for allocating resources of the congregation (or person for personal) It attempts to state the plan to be followed for the year to come. It provides a roadmap that measures where the church has been and where it is heading in terms of accomplishing the plan- staying on budget. Includes incomes and expenses.

Question 19

What is a proforma budget?

Answer 19

1. this means your best guest of what something is going to cost
2. Latin for “according to form or for form’s sake”
3. Assumed, forecasted, or informal information presented in advance of the actual or formal information.
4. The common objective is to give a fair idea of the cash outlay.
5. Statements give an idea of how the actual statement will look if the underlying assumptions hold true.
6. A cash-flow plan of what the balance sheet will be if all works the way you plan

Question 20

Reasons for budgeting

Answer 20

to know where your money comes from and where it is going. To track your spending and receiving, to make sure all of your bills are paid
In the book: Page 107

1. Formalizes planning
2. Reduces emotion
3. Basis for performance evaluation
4. Basis for control
5. Assists in communication between groups
6. Gets members involved
7. Increases the commitment to giving
8. Generates confidence in leadership
9. Allows for continued operation
10. Allows time to lend and borrow
    on

Question 21

Define financial transparency

Answer 21

not hiding your financial situation, it is a way of disarming the power of money, while secrecy places money in a position of power.

Question 22

What are the five things that a church should do to intentionally foster transparency

Answer 22

1. Conduct an annual audit
2. Share complete, clear, audited financial information openly with the congregation
3. Have a comprehensive system of internal control in place
4. Actively engage in preventing fraud
5. Purposefully foster an internal culture of openness

Question 23

Internal Controls – Define and be aware of what should be followed by businesses

Answer 23

a system of checks and balances, no one person has the power to control/ use the money without someone else knowing about it. Multiple people are involved in counting the money, using the money, and tracking the money. It is never done in private or by a married couple without another party present.

1. Safeguards assets against theft or accidental loss
2. Promote the efficient use of the church’s assets,
3. help provide sound financial info to be incorporated in church reports and financial statements

Question 24

6 principles of internal controls

Answer 24

1. physical controls to safeguard assets
2. segregation of duties
3. authorization procedures
4. documented transaction trails
5. reconciliation controls
6. Competent. Trustworthy employees

Question 25

Fraud Triangle

Answer 25

1. Perceived pressure
2. Perceived opportunity
3. rationalization

Question 26

What are two important finance reports

Answer 26

Balance Sheet and Budgeted Financial Statements

Question 27

Three Main Factors that contribute to Fraud

Answer 27

Perceived pressure, perceived opportunity, rationalization-

Three reasons-Lack of segregation of duties, Trust, Change

Question 28

Internal Control procedures and policies

Answer 28

Procedures & Policies that a business has in place to make sure the ASSETS and RECORDS of the business are kept free from theft and manipulation, GOALS-Protect the assets of the company, Makes accounting data reliable

Question 29

Accounting Abbreviations

Answer 29

FYE- Fiscal year-end
YTD- Year to date
I&E- Income & expense
GL- General ledger
AP- Account payable
PC- Petty Cash
AR- Account receivable
FB- Fund Balance

Question 30

Budgeting Process

Answer 30

October 1 - September 30

• After Christmas you revise the budget
• 2 Times
• History - how much did we make/spend on this line item last year?
• What do we intend to do with the program over the next year - any changes?
• Cost of living/inflation changes?
• Change in circumstances - (Additional Officer/Employee staff added?)
• A pro forma budget is a budget prepared in advance of possible changes to your company that would affect your business’s operating structure or finances. A pro forma budget forecasts revenues and expenses in advance for a particular project…A pro forma budget depicts the anticipated results of the proposed change, including the projected cash flows, net revenues, and taxes.”

Question 31

Four Functions of Money Management

Answer 31

• Receive the money
• Record the money
• Budget the money
• Spend the money

Question 32

When do you prepare an operating budget?

Answer 32

Late spring early summer

Question 33

Budget Period

Answer 33

October 1st-September 30

Question 34

How often do you prepare your budget?

Answer 34

At least once a year

Question 35

Review the need for having a stewardship plan?

Answer 35

Is an organized program to educate and motivate the people in the local church to spiritual faithfulness, but it’s not limited to simply finances. It’s for the broader purpose of educating people in proper management of their time, talent, and treasures for the glory of God- the total stewardship of the believer.

Question 36

Why is there a need for an annual Stewardship Campaign?

Answer 36

1) To help strengthen Christians- to be taught how to manage God’s resources, shows that all money belongs to God, makes it easier to give it back to God.
2) To help all Christians become obedient- every person in the congregation will receive campaign information and materials because this is not just about acquiring money but to help obey God and becomes stewards of His possessions.
3) To build relationships with marginal attenders- all members are contacted and often say you only contact me for money but the campaign encourages those that need to become faithful to do so through their contact with faithful workers.
4) To share our blessings-God asks for stewardship only after he gives to us.
5) To revel our hearts- it reveals the heart of all members because they are brought to a place where they must account for the way God has blessed them during the past year. It’s a time of self-evaluation, commitment to God, and potentially a time for revival.
6) To Give to God- God expects a good return on his resources, he put Christians in charge of resources, and we should give back of what we have been given.
7) To Teach Judgement- Christians should know that they will be judged and that judgement is based on their stewardship.