About Accounts and Account Types

On Financial Suite reports, all accounts are grouped by account type. A Balance Sheet Report contains Assets, Liabilities, Fund Principals, and Restricted accounts. Income/Expense reports or ACS Analysis of Revenue reports can contain accounts such as Revenues, Expenses, and other revenue and other expenses.

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Click on the account type in the list to read about it:

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Account types

• Assets
• Liablities
• Restricted Accounts
• Fund Principal
• Revenues
• Expenses
• Quick Reference Chart

• Assets include cash, cash in the bank, land, savings, stock, bonds, investments, accounts receivable, equipment, promises from others to pay, or any other physical resource with value. Asset accounts carry a debit balance.
• Land, buildings, tools, and supplies are called fixed assets and represent items typically held for more than a year that can be easily converted to cash.
• Promises from others to pay the church or organization are often called receivables. These can include tuition commitments for a school.
• Receivables, plus cash, stock, and other available assets are called current assets. They can typically be quickly converted to cash.

• Liabilities include goods or services bought on credit or time. Liabilities are also commitments that are owed.
• Loans from the bank are long term liabilities.
• Bills from vendors for services rendered are often called payables.
• Payments owed for payroll taxes, insurance benefits, etc. are also liabilities.
• Income taxes withheld from employees’ paychecks are liabilities. Liability accounts carry a credit balance.

• Money has been entrusted to the church for a specific purchase, such as a new building or a Youth Ministry.
• Your organization must spend this money as specified or return it to the donor, unless some other arrangement is made.
• GAAP require that you show Designated and Restricted accounts separately.
• Restricted accounts carry a credit balance. Receipts post to restricted accounts as credits. Disbursements from a restricted account post as debits.
• Restricted accounts are not revenue. They are liabilities in restricted accounts.
• Temporary Restricted accounts could be used for a gift designated for a youth trip or memorial, while Permanent Restricted accounts could be used for endowments, from which only the interest on the principal can be used, not the principal itself.

• Your organization’s resources are located in the fund principal. This fund principal is comparable to an owner’s equity in a business.

• The Fund Principal is based on the following equation:

  Code Block
  [(Assets – Liabilities) – Restricted Accounts] + (Revenues – Expenses) = Fund Principal

• The Fund Principal equals your assets minus liabilities and restricted accounts, plus revenue minus expense accounts.
• At the end of the accounting cycle, all revenue and expense accounts, also called temporary accounts, close to a Fund Principal account.
• Fund Principal Accounts must be located under the Fund Principal heading to print the balance sheet correctly. Although the Fund Principal is a main heading, it is also a liability. 

• Revenues carry a credit balance.
• Examples of revenue forms for a non-profit organization include offerings, tithes, and book sales.
• Revenue Accounts are also called Income Accounts.

• Expenses carry a debit balance.
• Examples of Expenses include utilities, wages, and maintenance expenses.
• Expenses are the monetary measurement of resources the organization uses during a period of time for which cash or other compensation was given.

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