The chart of accounts is a highly detailed list of various account types an organization manages. A nonprofit's chart of accounts gives the organization a uniformed manner in which to track assets, liabilities, equity, revenue, and expenses ("chart of accounts definition", n.d.). The benefit of a chart of accounts is that it can be tailored to properly reflect the needs and operations of each organization. These documents are not only used by those within the organization, they also provide financial transparency to the board members and the public. The basic structure of this tool is simple; one of five categories separates items that are coded numerically. The need and detail of these categories are unique to each organization. However,
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Following the assets are liabilities. This is where an organization must account for everything they owe. Within the charts of account, liabilities are numbered in the 2000's (Scarano, 2016). A nonprofit might have items in the liabilities category such as mortgages and accrued expenses (Scarano, 2016). By providing a detailed list of the money that an organization owes, they can better allocate funds to those areas. An organization's equity (also referred to as net assets) is the third category. The net assets are found in the 3000 range. In this category, a nonprofit would take their assets and subtract the amounts found in the liabilities category. The amount that this simple equation provides is what the organization's net worth is. For a nonprofit organization, they would refer to the net worth as the fund balance (Scarano, 2016). Revenue is the fourth category, and have numbers assigned to items ranging in the 4000's. Revenue accounts for money coming into the organization (Scarano, 2016). For a nonprofit organization, some of the common ways to raise funds are …show more content…
(n.d.).
Retrieved July 13, 2017, from https://www.accountingcoach.com/terms/C/chart-of-accounts
Cullinane, M. (2014, June 26). Nonprofit board vs. executive director. Who does what?
Retrieved July 14, 2017, from https://cullinanelaw.com/nonprofit-board-vs-executive-director
Scarano, J. (2016, May 16). What Makes the Chart of Accounts for Nonprofits Unique.
Retrieved July 13, 2017, from
Following the assets are liabilities. This is where an organization must account for everything they owe. Within the charts of account, liabilities are numbered in the 2000's (Scarano, 2016). A nonprofit might have items in the liabilities category such as mortgages and accrued expenses (Scarano, 2016). By providing a detailed list of the money that an organization owes, they can better allocate funds to those areas. An organization's equity (also referred to as net assets) is the third category. The net assets are found in the 3000 range. In this category, a nonprofit would take their assets and subtract the amounts found in the liabilities category. The amount that this simple equation provides is what the organization's net worth is. For a nonprofit organization, they would refer to the net worth as the fund balance (Scarano, 2016). Revenue is the fourth category, and have numbers assigned to items ranging in the 4000's. Revenue accounts for money coming into the organization (Scarano, 2016). For a nonprofit organization, some of the common ways to raise funds are …show more content…
(n.d.).
Retrieved July 13, 2017, from https://www.accountingcoach.com/terms/C/chart-of-accounts
Cullinane, M. (2014, June 26). Nonprofit board vs. executive director. Who does what?
Retrieved July 14, 2017, from https://cullinanelaw.com/nonprofit-board-vs-executive-director
Scarano, J. (2016, May 16). What Makes the Chart of Accounts for Nonprofits Unique.
Retrieved July 13, 2017, from