What is a Nonprofit Chart of Accounts? [Easily Explained]

hey this is Alex from Aplos software today we're gonna take a look at accounts what they are when you create them and how do you use them for your organization if you need to create a non-profit chart of accounts this is the lesson for you so what is a chart of accounts a chart of accounts is really just a listing of the accounts that you're gonna use for your organization and accounts are the numbers and names that you set up to track your assets liabilities income expense and your equity so to

make it a little bit more clear let's run through some examples of the types of accounts you'll need to create for your nonprofit so when creating a chart of accounts each type of account is going to have a number and a name assets are going to be numbered in the 1000 in the 2000s equity in the 3000 s income in the 4,000 s and expenses are 5000 Plus this is done because of the GAAP standards which means generally accepted accounting principles because of this your chart of accounts will have nu

mbers and names that are familiar to everyone not just you let's start with assets assets being anything that your organization owns can include things like the cash in your bank accounts accounts receivable inventory or fixed assets like a house or a yacht or a high-quality snow cone machine so for example 1,000 - checking seats that's simple to create an account what you do is assign it a number so 1,000 the name which is checking which represents what it is so going forward this account is go

ing to be used to represent your checking balance so next is your liabilities a liability being any money that you owe can include things like accounts payable short or long term debt like an auto loan or that weight bench that you thought was a great idea but now it just holds your potted plants it was on sale and it was very shiny so in accounts payable account would look something like this mm - accounts payable so going forward this account would be used to track the amount of money that you

owe others from invoices or bills that you received next is your equity equity being your overall worth can include things like retained earnings unrestricted temporarily restricted and permanently restricted net assets or fund balances equity is the value of your assets minus your liabilities in other words the money that you have less the money that you owe is your overall worth this information is reflected on a balance sheet report which we'll cover in lesson five after we run through some

examples of income and expense we're gonna talk about nonprofit equity in more detail so next is income income being money that you get can include things like contributions pledges grants or revenue like your paycheck or a sweet weight bench that you can sell on eBay plants not included support an example you can use the number 4000 and call it contributions income so going forward this account would be used to track the money that you receive from your contributions so finally we have expense

expenses being money that you spend can include everyday expenses like office supplies printing costs salary bills rent purchase orders program expenses basically anything that you spend your money on even if you regretted it was so shiny and it was on sale so as an example you can use the number 5,000 and then - salary expense going forward this account would be used to track any money that you spend on salary for your nonprofit with all of the above in mind your chart of accounts would look so

mething like this so let's take a quick look at nonprofit equity equity being again your overall worth for a non-profit is actually your fund balances so like we mentioned in lesson 2 a fund is any kind of mini organization within your larger nonprofit for each one of these funds you're gonna want to create an equity account for it so for example 3,000 general fund 3100 mission's fund 3,200 building fund 33 special projects funding basically any fund that your organization has create an equity a

ccount for it and that's going to track its overall worth so what next account so the foundation for any accounting system with the knowledge that you have now go through your organization and think through all the different types of accounts that you'll need to create write them down and then come back next week while we take a look at transactions