How to use fund accounting in QuickBooks
The Financial Accounting Standards Board (FASB) requires nonprofit organizations to divide financial information among a variety of categories (funds) and to use standardized nonprofit reports to report on these funds. These funds indicate that there are restrictions on the use of resources, and they are used to measure the revenues and expenditures arising from particular activities.
Each nonprofit organization is responsible for the proper collection, disbursement, and control of all money relative to the funds the organization receives. For example, a school superintendent is responsible for all School Activity Funds, including agency funds that are held by the school in a temporary, purely custodial capacity.
Who uses fund accounting?
Using fund accounting in QuickBooks
Fund accounting assists in determining the amount of revenue (or expense) realized from an activity or fund after taking into account expenditure items. It can also help you determine if theft has occurred, if sales are too low, or if the markup is sufficient to cover costs or to allow a suitable profit for fundraising.
You can use QuickBooks to:
- Enter and manage fund information.
- Track and report on funds from multiple sources across multiple budget periods.
- Create a class for each fund that you want to track.
Assign the appropriate class to each QuickBooks transaction.When you receive a donation or payment, select the class that corresponds to the appropriate fund for all receipts and disbursements. This enables you to track the amounts related to each activity or fund separately.
Go to the Reports menu, choose Industry Specific, choose Nonprofit Reports, and then click Statement of Financial Income and Expense (Profit & Loss).If you selected a fund (class) when you entered each donation or payment transaction, the report will accurately reflect your organization's profit and loss for one of your activities or funds.
Go to the Reports menu, choose Memorized Reports, choose Nonprofit, and then click Statement of Financial Income and Expense (Profit & Loss).If you selected a fund (class) when you entered each donation or payment transaction, the report will accurately reflect your organization's profit and loss for one of your activities or funds.
Generate the Budget vs Actual by Programs/Projects report.When you enter funds as classes, this report compares your budgeted income and expenses to your actual income and expenses by program or fund.
Although QuickBooks provides you with a procedure for checking your fund balances, it cannot give you a Statement of Financial Position (Balance Sheet by fund/class report). It can, however, give you a Statement of Financial Income and Expense (profit and loss report) by fund (class) and a Statement of Functional Expense report.
You can use these reports to help categorize your income and expenses correctly and to save time filling out IRS Form 990. You can also use the Budget vs Actual by Program/Project report to monitor real-time activity of your funds (when you set up funds as classes).
If you use classes to track funds and you want to be able to see your fund balances in a report, do not use the QuickBooks Clean Up Company Data feature.
See also
- Track funds with classes
- Other uses for classes (besides fund tracking)
- Enter beginning balances for funds
- Track and report with fund accounting
- Check your fund balances
Accounts Receivable
Account definition
The record of money owed to your business for goods or services; that is, invoices for which your business hasn't received payment yet. Accounts Receivable is called A/R for short. (Even though the word "accounts" is plural, QuickBooks uses a single account on the chart of accounts to track all outstanding invoices.)
Accounts receivable account
An account that QuickBooks automatically adds to your chart of accounts the first time you write an invoice. QuickBooks uses this account to track the money owed to your business. When you write an invoice or receive a payment from a customer, QuickBooks records the transaction in the register for your Accounts Receivable account.
Your chart of accounts lists the type of this account as "Accounts Receivable." If you need to use more than one of this type of account in your business, you can add additional "accounts receivable" accounts to the chart. When you have more than one accounts receivable account, QuickBooks lets you choose the account you want to use when you write an invoice or enter a customer payment.
Chart of Accounts data that gets converted from Small Business Accounting/Office Accounting
SBA
The list of all accounts in your company is called the chart of accounts. The chart of accounts defines the accounts in your general ledger and categorizes them into assets, liabilities, equity, income, and expense accounts. The setup for your chart of accounts determines how your Profit & Loss and Balance Sheet reports look and what information they contain.
Account data that gets converted to Small Business Accounting/Office Accounting
The QuickBooks Conversion Tool converts most of your account-related data, except when the information is unique to Small Business Accounting/Office Accounting.
The following tables list the chart of accounts data that will be converted (or not converted).
Small Business Accounting/Office Accounting Account Type | QuickBooks Account Type |
| Bank | Bank |
| Cash (Petty Cash) | Bank |
| Accounts Receivable (Small Business Accounting/Office Accounting has only one A/R account) | Accounts Receivable |
| Other Current Asset | Other Current Asset |
| Inventory Asset (unique to Small Business Accounting/Office Accounting) | Other Current Asset |
| Cash (Undeposited Funds) | Other Current Asset |
| Fixed Asset & Accumulated Depreciation | Fixed Asset |
| Other assets | Other Asset |
| Accounts Payable (Small Business Accounting/Office Accounting has only one A/P account) | Accounts Payable |
| Credit Card | Credit Card |
| Current Liability | Other Current Liability |
| Long Term Liability | Long Term Liability |
| Equity |
