Scout Troop Account Structure & Invoice Procedure for Dues

DaveC49 davidcousens at bigpond.com
Mon Apr 4 19:15:00 EDT 2016


Hi Joshua,

The basic relationship between balances of the types of accounts in double
entry book-keeping is 

Assets = Liabilities + Equity + (Income -Expenses)

These terms are both the names of the top level accounts and  type of the
accounts under them. What you referred to as nett Assets is just Equity by
another name but because it has a different name there is less confusion
about what someone is referring to if they use the term assets without any
qualification.

Assets are the resources of your entity that it can use
Liabilities are calls that external entities have on the entity you are
running
Equity is the nett worth of your entity

The previous three account types are normally referred to by accountants as
the permanent accounts  as their balances carry over from one accounting
period (usually a financial year) to the next.

Income accounts are pretty obvious as are Expense accounts. These are known
as temporary accounts as their balances are returned to zero by transferring
the (Income-Expenses) balances to Equity:Retained Earnings at the end of the
financial year.  In a business this would be the gross profit but for a not
for profit organisation you would refer to it as a deficit or surplus. Mike
and Penny Novak are pretty experienced at accounting in the not-for  profit
sector so their advice is worth following. The full closing procedure as it
is called is described in the Gnucash manual/tutorials

A debit to an Asset account  or an Expense account (- sign on the other side
of the equal sign) will increase the balance of the account while a credit
to those accounts will decrease the balance.

Conversely a debit to a Liability, Equity or Income account decreases the
balance of the account and a credit will increase the balance of the same
account.

You are OK to use Liability accounts to accumulate overpayments from the
parents, as it is a Liability on your scout group that you may have to repay
the parents at some future time and it is probably more kosher but
equivalent to what I had suggested. Just replace Income:OverPayments with
Liability: Nick in the transactions I described and it will work fine.

As long as you record what happens, an accountant should be able to make
sense of it , provided you are around to explain it to him, but if you have
followed more generally accepted procedures you don't necessarily need the
continuity as everything should become self explanatory, at least to an
accountant. You may also find the regulations you may have to conform to
vary with jurisdiction and the legislative framework used. the good thing
with Gnucash is you have plenty of opportunity to put notes and
explanantions in the comment field

@Jason

I haven't had to use the business reporting features much of late since
Iretired. The basic ones have been sufficient. You probably have to
customize them to get exactly what you want and that's a new learning curve.

If you get the basic recording of information right , then you can start
using more complex features as you learn.

The other good  thing with Gnucash is that until your accounts have been
reconciled ( with your bank statements or other external records) you can
change the accounts associated with the debit and credit sides of the
transactions, so as your understanding of the bookkeeping process increases
you can usually fix earlier mistakes and work out more appropriate ways to
record specific transactions. You do need to understand the concepts of
splits and the double entry process before jumping in at this level though.

When I first started using GnuCash after transitioning from MYOB, I setup a
dummy set of accounts that I could experiment without fear while keeping my
basic books for the business fairly simple and separate. I still use that
approach now.

My accountant at the time I set my business up using MYOB used to shake his
head at the way I initially recorded the equity in setup of the company, but
he soon had me on the right track. Wouldn't tell me the right way to do
things, but I used the head shaking as an indication I needed to do a bit
more reading about accounting. Eventually got sick of paying him and studied
accounting for real.

Cheers

David Cousens



--
View this message in context: http://gnucash.1415818.n4.nabble.com/Scout-Troop-Account-Structure-Invoice-Procedure-for-Dues-tp4684073p4684124.html
Sent from the GnuCash - User mailing list archive at Nabble.com.


More information about the gnucash-user mailing list