The Operating Budget statement reflects our approved Operating Budget expressed as projected financial statements using GASB (Government Accounting Standards Board) rules. Approved by the UMass Board of Trustees, this statement uses the accrual-basis accounting method which reflects activity rather than actual cash transactions. For example, revenues are included when earned, rather than when the cash is received. Expenses are included when incurred, rather than when paid. Most significantly, this statement replaces payments for debt principal and transfers to plant funds with annual depreciation of capital assets. Depreciation is the annual charge for the use of capital assets (buildings, infrastructure and equipment), and works on the principle of matching expenses to revenues earned. Costs for these assets are ratably charged over their useful life, rather than charging the operation at the time of construction/purchase for the costs of large assets that will be utilized over many years.