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Questions about Bookkeeping for a non-profit social organization

We're recently elected treasurer of a local social organization and are being hassled by some accounting types as to how to present financial data to the group. The argument is that we are not following GAAP precisely and are doing things like: (a) reporting P&L and Balance Sheet with mid-month ending dates, (b) reporting expenses for events where there has been no income for the current fiscal year, (c) reporting certain pass-thru donations as "Other Income"

The organization has been doing accrual accounting via QuickBooks for the last several years. However, there is no payroll, no inventory, no customers, no taxes, no receivables, and rarely an accounts payable type of transaction.

We feel like our mission is to handle the organization's finances with care, according to an approved budget, and to provide the members a clear view of the finances.

So my questions are: (1) are items (a),(b),(c) above worth worrying about in our situation? (2) should we be doing cash accounting instead of accrual accounting?

Thanks in advance for your advice!

Reply to
NoSpam
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For most non-profits the cash basis of accounting is preferred. The accrual basis really serves no purpose for a non-profit because cash receipts and disbursements is the correct name for a non-profit as opposed to Profit and Loss. You state you have members and it is a social organization. The key should be to keep the financial records as simple as possible so everyone concerned understands and the cash basis certainly does that.

Reply to
aps

basis really

Could you please give us a couple of general tips on how to determine if a NFP 501(c) corporation should use a cash or accrual basis accounting system?

If a NFP has substantial assets and costs (5 to 6 figures usually) would that automatically make an accrual basis accounting system necessary or even mandatory per IRS requirements?

Thank you.

Reply to
qbuser

Thanks for your reply. It reinforces our conclusions exactly but there are some accounting types in the group that have been adamant about what our financial reports should look like. We like your renaming of the P&L - makes perfect sense.

Your response is so good we going to quote you directly.

Thanks again.

Reply to
NoSpam

NP, glad to help. One more thing that helps also. When you do your "Cash Receipts and Disbursments" statement, below the detailed income and receipts it helps the users (recipients) to further understand the cash position of the organization if you will include the line, "Increase (Decrease) in Cash" for the reporting period. Assuming it is cash receipts and disbursements for August 31, 2008, You would include a line below the increase of decrease in cash entitled "Cash Balance, July 31, 2008" then on the next line, "Cash Balance, August 31,2008 to reconcile to your actual cash balance that ties to your checking account balance at the August EOM (end-of-month) reporting period.

David Bemiss (Accountax Pro Svcs)

Reply to
aps

Interesting format, showing the checking account reconciliation. I assume to do that in QB would require a special footer as apposed to a memorized report that would automatically show it(?). I know I could export a QB report to Excel and enter more comments and data but I would like to automate the reporting process. Am I missing some QB reporting options that would make your format easy?

Actually we had planned to make financial reports available that showed "Fiscal YTD Receipts and Disbursements vs Budget" along with a separate, current Balance Sheet.

We plan to have financial reports available at the organization's website asrda.org but presently we have the starting financial reports at asrda.info.

Thanks again DB for your advice!

Loren

Reply to
NoSpam

Not to my knowledge, but you can export the report to Excel and add these features ver easily, then simply memorize it in QB each YTD report you run. Positive and negative variance analysis comparing actual to budget can be of importance too, especially in determining how funds are raised for the organization. I don't want to get too technical here but yes, it can be done and put on your site in a .pdf format.

Reply to
aps

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