David Broxson

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Understanding the Balance Sheet

• David Broxson
• Entech Rental Management
• Software
• Navigate 08 Charting Your Course for the Future

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UNDERSTANDING THE BALANCE SHEET

• IN A TRUST/ ESCROW ACCOUNT, YOUR ASSETS MUST
  EQUAL YOUR LIABILITIES.
• THE ASSET/ LIABILITY RELATIONSHIP CAN BE PICTURED
  AS A SCALE.

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ASSETS LIABILITIES
ASSETS
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ASSETS LIABILITIES
LIABILITIES
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ASSETS
ASSETS

• THE ASSETS IN ENTECH BREAKDOWN INTO TWO
  CATEGORIES
• MONEY NOT DEPOSITED CASH IN BANKS

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ASSETS MONEY NOT DEPOSITED

• INCLUDES
• CASH
• CHECKS
• CREDIT CARDS
• OTHER PAYMENTS
• NOT POSTED AS DEPOSITED
• IN ENTECH

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BALANCE SHEET DETAIL
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ASSETS CASH IN BANKS

• INCLUDES
• EACH BANK ACCOUNT BALANCE
• MONEY POSTED AS DEPOSITED
• IN ENTECH

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BALANCE SHEET DETAIL
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TOTAL ASSETS CASH AND BANK
MONEY NOT DEPOSITED CASH IN BANK TOTAL ASSETS
MAINTAINING THE ASSETS THROUGH THE BANK
RECONCILIATION IS KEY TO THE BALANCE SHEET
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LIABILITIES
LIABILITIES

• THE LIABILITIES IN ENTECH ARE DIVIDED INTO
  SEVERAL CATAGORIES
• DEPOSITS HELD, PREPAYMENTS HELD, AMOUNTS NOT
  POSTED, DUE OWNERS ACCOUNTS PAYABLE

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LIABILITIES DEPOSITS HELD

• MONEY THAT IS BEING HELD AS REFUNDABLE DEPOSITS

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LIABILITIES PREPAYMENTS HELD

• MONEY RECEIVED FROM GUESTS BEFORE CHECK-IN TO PAY
  FOR RENT, TAX, AND/OR OTHER CHARGES.

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LIABILITIES AMOUNTS NOT POSTED

• GUEST PAYMENTS THAT HAVE NOT DISPERSED TO THE
  OWNERS AND/OR VENDORS.
• RESERVATIONS MUST BE CHECKED-IN OR CANCELLED FOR
  PREPAID MONEY TO BE LISTED IN AMOUNTS NOT POSTED.

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LIABILITIES DUE OWNERS

• MONEY ON THE OWNERS ACCOUNT TO BE PAID TO THE
  OWNER.
• WHEN INCOME IS POSTED TO THE OWNERS (AS IN THE
  CASE OF RENTAL INCOME) IT IS DUE OWNERS UNTIL THE
  OWNER CHECKS ARE POSTED.

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LIABILITIES ACCOUNTS PAYABLE

• MONEY ALLOCATED TO PAY TO VENDORS.
• WHEN THE MONEY IS POSTED TO VENDORS (AS IN THE
  CASE OF TAXES) IT IS ACCOUNTS PAYABLE UNTIL THE
  VENDOR CHECKS ARE POSTED.

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LIABILITIES TOTAL LIABILITIES

• DEPOSITS HELD
• PREPAYMENTS HELD
• AMOUNTS NOT POSTED
• DUE OWNERS
• ACCOUNTS PAYABLES
• TOTAL LIABILITIES

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ASSETS LIABILITES
MONEY NOT DEPOSITED CASH IN BANK
DEPOSITS HELD PREPAYMENTS HELD AMOUNTS NOT
POSTED DUE OWNERS ACCOUNTS PAYABLE
TOTAL LIABILITIES
TOTAL ASSETS
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BALANCE SHEET IN ACTION

• A GUEST SENDS IN A CHECK FOR A 300 SECURITY
  DEPOSIT.
• WHEN THE PAYMENT IS RECORDED
• MONEY NOT DEPOSITED WILL INCREASE 300
• DEPOSITS HELD WILL INCREASE 300

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BALANCE SHEET CASH FLOW
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BALANCE SHEET SUMMARY
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BALANCE SHEET IN ACTION

• ONCE THE 300 IS DEPOSITED IN THE BANK, IT MOVES
  FROM MONEY NOT DEPOSITED TO CASH IN BANK
• CASH IN BANK 300
• DEPOSITS HELD 300

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BALANCE SHEET CASH FLOW
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BALANCE SHEET SUMMARY
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BALANCE SHEET IN ACTION

• NOTICE THAT AS THE MONEY WAS COLLECTED BOTH SIDES
  OF THE BALANCE SHEET WERE AFFECTED
• ONCE THE MONEY WAS DEPOSITED INTO THE BANK THE
  ASSET DETAIL CHANGED BUT THE TOTAL ASSETS DID NOT
  CHANGE

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BALANCE SHEET CASH FLOW
IN BALANCE

ASSETS
ASSETS
LIABILITIES
LIABILITIES
300 MONEY NOT DEPOSITED
300 DEPOSITS HELD
300 CASH IN BANK
300 DEPOSITS HELD
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BALANCE SHEET SUMMARY
MONEY NOT DEPOSITED
CASH IN BANKS
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BALANCE SHEET IN ACTION

• A PREPAYMENT IS RECEIVED BY CREDIT CARD FOR 800
• WHEN THE PAYMENT IS RECORDED
• MONEY NOT DEPOSITED WILL INCREASE 800
• PREPAYMENTS HELD WILL INCREASE 800

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BALANCE SHEET CASH FLOW

ASSETS
LIABILITIES
800 MONEY NOT DEPOSITED
800 PREPAYMENTS HELD
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BALANCE SHEET SUMMARY
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BALANCE SHEET IN ACTION

• ONCE THE 800 IS DEPOSITED IN THE BANK IT MOVES
  FROM MONEY NOT DEPOSITED TO CASH IN BANK
• CASH IN BANK 800
• PREPAYMENTS HELD 800

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BALANCE SHEET CASH FLOW
ASSETS
LIABILITIES
800 CASH IN BANK
800 PREPAYMENTS HELD
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BALANCE SHEET SUMMARY
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BALANCE SHEET IN ACTION

• ONCE THE RESERVATION CHECKS IN THE 800 IS NO
  LONGER A PREPAYMENT HELD
• IT IS NOW LISTED UNDER AMOUNTS NOT POSTED
• CASH IN BANK 800
• AMOUNTS NOT POSTED 800

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BALANCE SHEET CASH FLOW
ASSETS
LIABILITIES
800 CASH IN BANK
800 AMOUNTS NOT POSTED
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BALANCE SHEET SUMMARY
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BALANCE SHEET IN ACTION

• WHEN INCOME IS POSTED LIABILITIES ARE SHIFTED
  FROM AMOUNTS NOT POSTED TO DUE OWNERS AND
  ACCOUNTS PAYABLE
• THE ASSETS DO NOT CHANGE
• DUE OWNERS RENTAL INCOME
• ACCOUNTS PAYABLE TAXES, COMMISSION, OTHER
  RESERVATION CHARGES

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BALANCE SHEET CASH FLOW
ASSETS
LIABILITIES
800 DUE OWNERS ACCOUNTS PAYABLE
800 CASH IN BANK
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BALANCE SHEET SUMMARY
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BALANCE SHEET IN ACTION

• THE ASSETS AND THE LIABILITIES WILL BE REDUCED
  WHEN CHECKS ARE POSTED
• IF THE CHECK AMOUNT TO THE OWNER IS 595.00, THE
  CASH IN BANK AND DUE OWNERS WILL BE REDUCED BY
  595.00

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BALANCE SHEET CASH FLOW
LIABILITIES 800.00 MINUS OWNER CHECK
595.00 LIABILITIES 205.00
CASH IN BANK 800.00 MINUS OWNER CHECK
595.00 CASH IN BANK 205.00
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BALANCE SHEET SUMMARY
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BALANCE SHEET SUMMARY

• ANY QUESTIONS?

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MAINTAINING THE BALANCE SHEET

• WHY IS THIS IMPORTANT?
• YOUR MANAGEMENT COMPANY IS RESPONSIBLE FOR
  KNOWING WHERE ALL OF THE MONEY IS, UNTIL IT HAS
  BEEN DISPERSED TO THE GRANTEE.
• YOU WILL BE ABLE TO SEE WHERE ALL THE FUNDS ARE
  FOR AUDITING PURPOSES.
• PEACE OF MIND.

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MAINTAINING THE BALANCE SHEET

• HOW OFTEN SHOULD THE BALANCE SHEET SUMMARY BE
  CHECKED/ PRINTED?
• YOU SHOULD CHECK THE BALANCE SHEET SUMMARY AT
  LEAST ONCE A DAY.
• WHENEVER YOU ARE DOING SOMETHING IN ENTECH AND
  YOU ARE NOT SURE ABOUT THE OUTCOME.
• ANYTIME YOU GET A MESSAGE IN ENTECH ABOUT
  AFFECTING YOUR BALANCE SHEET SUMMARY.
• EVERY MONTH ON THE CLOSING DATE OF THE BANK
  STATEMENT (SHOULD HAVE PRINTED COPY).

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SUMMARY

• BALANCE SHEET SUMMARY SHOULD REMAIN IN BALANCE AT
  ALL TIMES.
• THE BANK ACCOUNT(S) SHOULD BE RECONCILED THROUGH
  ENTECH.
• CHECK YOUR BALANCE SHEET AT LEAST ONCE A DAY.
• WHEN YOU ARE OUT OF BALANCE, STOP AND EVALUATE.
  DO NOT LET DIFFERENCES LINGER.

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ANY FINAL QUESTIONS?