The detail list of minor categories under the major categories of asset, liabilities, net assets, revenues and expenses t is known as chart of accounts.
For example: The chart of accounts is like a building which is about to get constructed. The stronger the base, the stronger the building is.
In other way, we can also say that the chart of account act as a filter through which the information from outside world enters in the accounting system. The basis of report is totally dependent on the chart of accounts.
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You can use QuickBooks Online for Nonprofit. You can have Chart of accounts as per your QuickBooks account. Also, you can create multiple accounts in QuickBooks Online by purchasing additional subscription.
What are the Types of Accounts?
People thinks that the bank provide us only two types of account that is current account and saving account but no, the bank provide us six types of accounts which financial institution offers. The six types of Accounts are:
- Banking Account at a Glance: The account at a glance is prepared to provide the summarized view of the account.
- Checking Accounts: The procedure of withdrawal and deposit of money in an account on a daily bases at financial institution is known as checking account. It is not a debit card.
- Saving Accounts: It is the basic account which securely deposits your amount in the bank. It ensures that you can withdrawal your money whenever you need.
- Money Market Accounts: The money market account or money market deposit account is the account which pays interest on the money deposit in the account on the basis of current interest rates on money. It is the special type of bank which has some extra features that regular accounts did not have.
- Certificates of Deposit: It is usually issued by the commercial bank. Certificates of deposit accounts means that the bank provides you some rate of interest on the amount deposit in bank for some time period.
- Individual Retirement Arrangements: It is the special type of saving account in which you can save your money for the purpose of creating a retirement corpus.
Advantages of Chart of Accounts:
- Your chart of accounts reflects your unique organization.
- The appearance of the balance sheet and the profit and loss reports are shown by the chart of accounts.
- Chart of Accounts helps in defining the detail of organization’s transaction.
- It is easy to enter the detail of transaction with the help of chart of accounts.
- Your company budget depends on the accounts, so it is easy to recognize it with the help of chart of accounts.
Set up of Chart of Accounts
The chart of account is divided in three columns. So, while creating the chart of accounts first you have to create a blank chart and assign columns in it. Setting of chart of accounts is easy and simple to create. Let’s create it by following the below mentioned steps:
- Create the Name of the Business Accounts: In this you have to give the name to business account for which you are reporting like Bank Fees, Cash, Taxes etc. It helps you identify your account in future when you need it.
- Assign Accounts Numbers to the Business Account: assign account numbers are the numbers which are assigned to the each and every account number. Following are the common account number which are given to the common account names, they are:
- Assets: Thousand to One thousand nine hundred ninety nine
- Liabilities: Two Thousand to Two thousand nine hundred ninety nine
- Income: Four Thousand to Four thousand nine hundred ninety nine
- Operating Expenses: Six Thousand to Seven thousand nine hundred ninety nine
- Organize the Names of the Account into One Account Category Type: You have to select one from the four account type i.e Assets, Liability, Expenses, Income according to the name and need of your account.
QuickBooks for Nonprofit
It is the unique process in which nonprofit plan, record, and report base upon their finances. The primary focus of profit is to earn or gain profit but the nonprofit basically focus on the accountability aspects of a accounting.
- After learning of planning and implementation you can start configuring QuickBooks for Your Nonprofit.
- In order to run reports by finding source or program you need classes utilities and utilize of customer and resource in order to set up QuickBooks.
- For Nonprofit coding and reporting you have to finish configuring QuickBooks.
- Search for the Version of QuickBooks which is available on Techs up.
Basic and Practice of Nonprofit Accounting
There are five basic and practice of nonprofit accounting, they are:
- How the Nonprofit Account is Different: The nonprofit is the type of accounting which is also known as fund accounting. As earlier discuss that nonprofit accounting focus on the accountability of the accounts.
- Non Profit Accounting Statements and Reports: Nonprofit accounting is not free for all. One who should access the nonprofit account must know the GAAP standards. GAAP stands for Generally Accepted Accounting Principles.
- Best Practices of Non Profit Accounting: You nonprofit account is responsible for all the bookkeeping entries like performing account and balance sheet renocillations, preparing of financial statements and reports etc in order you can make best financial decision in order to manage your nonprofit.
- Outsource Non Profit Accounting: In your company there will be one dedicated team with skill and capacity to handle accounting needs. If yes then it good in case if you do not have dedicated team for it then you can also outsource your account in order to handle the accounting needs properly.
- Non Profit Accounting Firm Recommendation: Whenever you outsource your finances to any of the trust worthy team then you will have the access to the professionals who are not only expert in finance but also understand the loop holes of the nonprofit world.
Configuring the Account for Nonprofit Organization
There are two methods of configuring account for nonprofit organization, they are:
Change the Company Type to Nonprofit
- From the Menu Select the Settings.
- From Setting Page Select the Account and Settings Option.
- Then Select the Advance option from the Account and Setting Page.
- Select the Edit Button in the Company Type.
- Now from the Drop Down Menu select the Tax Form and then Select Nonprofit Organization.
- Hit the Save and OK Button.
Change Customers to Donors
- From the Menu Select the Settings.
- From Setting Page Select the Account and Settings Option.
- Then Select the Advance Option from the Account and Setting Page.
- Select the Edit Button in the other Preference Menu.
- Now from the Drop Down Menu Select the Customer Label and then Select Donors.
- Hit the Save and OK Button.
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+1-800-596-0806 or chat with experts.
Frequently Asked Questions
How can I set a Nonprofit Account for the Company?
Following are the steps in order to change the company type to Nonprofit:
From the menu options you have to select stings option.
From the settings option you have to select the account and settings.
Now select the advance tab from the menu of accounts and settings.
Now from the type of company you have to select edit.
From the drop-down menu select the Nonprofit organization.
Select the save button in order to save changes and hit the OK button.
Now sign out from the QuickBooks and the sign in again in order to see if the changes are done successfully or not.
What do You mean by the Chart of Accounts in QuickBooks?
The Nonprofit Chart of Accounts can be defined as a guide that helps to classify the Nonprofit account and tracks expenses and revenue for the company. The chart of organization categories the revenue and expenses. It has the final document which is used by the organizations. The status of accounts for the money they receive and
How can I set Chart of Accounts in QuickBooks?
Following are the easy steps in order to set the chart of accounts in QuickBooks:
First you have to select the list of chart of accounts command.
Now from the option, click on the Accounts Button.
Now select the account tab from the menu and from the drop-down menu of account you have to select the New option in order to add new account.
Select the Account type button and find for the type of account from the drop down list.
Now Click on Continue in Order to go New Page.
Now Check for the Sub Account.
After Selecting Sub Account Click on the Main Account.
How can I Record Nonprofit Income in QuickBooks?
The following are the steps in order to enter income for Nonprofit:
First you have to open your QuickBooks Account and Select the Customer from the Menu.
From the Customer Drop Down Menu you have to Select the Create Credit Memo’s/Refunds.
Now Select Your Customer Whose Account is to be Edit.
Now you have to Enter the item Which is used in the Sales Transaction Which you are Refunding.
Now Hit the Save Button in Order to Save the Changes and Click OK.
What is the Classification of Accounts?
The chart of accounts organizes your finances are classified in 5 categories in order to create account:
Asset: The assets can be defined as the resources with the economic values that an individual or cooperation owns or control with the exception that it will provide future benefits.
Liabilities: Liabilities are something which a person or owes the sum of money. Liability is settling over in sometime through the transfer of economic benefits.
Equity: It helps in identifying the company balance sheet and it also represents the shareholder stake of the company.
Revenue: It is the money generated from the normal business operation and it is calculated as average sales price times by the number of units sold
Expenses: It is the cost of money to make money. It is the cost of operation with this company is able to generate the revenue.
How can I Decide that Which Type of Account is to Set up?
In order to select new bank, create new account there are eight steps you must keep in mind while doing so, they are:
The right account type must be chosen.
Search for the banks those who charge less fees or no fees.
Consider the convenience of bank branch.
Take a look at credit unions.
Search for the bank that supports your lifestyle.
Examine all the digital features of the bank.
Understand and have full and correct knowledge of the bank.
Read and write all the reviews of the banks which you are considering.
How can I Assign Numbers to the Chart of Accounts in QuickBooks?
The following are the easy and simples steps of assigning the numbers to the chart of accounts in QuickBooks:
From the menu bar select settings.
Now select the accounts and setting option from the setting window.
In the chart accounts settings click on the edit tab in order to edit the account.
Now turn on enable account numbers option from the options.
In order if you want to show account numbers on the report then click on the show account numbers button from the options.
In last hit the save and Ok button in order to save the details and move forward to the account.
How can You Categorize the Accounts in QuickBooks?
You can categorize accounts on the basis of transaction in the QuickBooks. Following are the steps in order to categorize the accounts:
First you have to open the transaction menu.
Find the transaction option on the list.
If the transaction belongs to business then select the business.
If the transaction belongs to personal then select the personal option.
In the category column you can review all the categories.
Select the given category link in case you want to change the category of the account.
Once you are done with editing then click on the save button and save all the changes you have done in category section.
What are the Golden Rules of Accounting?
There are the three types of account on which golden rules are applicable. The accounts are:
Real Account: It is the journal ledger account which use to reflect all the transaction related to the assets and liabilities.
Personal Account: The account which is related to the persons is known as the personal account.
Nominal Account: The general ledger account which is related to all the business income, expenses, profit and losses that type of account is known as nominal account.
There are the three golden rules of accounting on which all the operations are based. They are:
Debit what comes in and credit what goes out.
Debit is the receiver and credit is the giver.
Debit is all expenses and losses and credit all incomes and gains.