Chart of Accounts - General Information

Chart of Accounts - General Information

Overview:


The Chart of Accounts is a list of the accounts that you will use for recording transactions in your ledgers.
These include:



  1. Checking and savings accounts
  2. Transaction accounts for the payment processors (PayPal, TransFirst, Stripe or PaySimple)
  3. Liabilities or escrow accounts
  4. Income Budget Line Items
  5. Expense Budget Line Items

Four Categories in the Chart of Accounts:
  1. Assets
  2. Liabilities
  3. Income
  4. Expenses 
 
Each listing in your Chart of Accounts is associated with a Membership Toolkit Account Number.  You can also set-up your list of chart of accounts using your own account numbers.  Defaults for account numbers are:
 
Asset Accounts: 1001-1999
Liabilities: 2001-2999
Income: 4000-4999
Expenses: 5001-5999
 


Editing Account Names
To edit the name on the account, select the account number. You can edit the account name and the description associated with the account number.

 
Deleting Accounts
Once an account has a transaction associated with it, you will be unable to delete that account. Prior to an account having a transaction tied to it, you can delete it. 
  1. Go to the Accounts tab
  2. Select the account number that you want to delete
  3. If you are able to delete the account, the “delete” button will be in the bottom right corner.


Asset Accounts


In your Chart of Accounts, the Asset Accounts are set up with Asset Account Numbers: 1001-1999


Examples of Asset Accounts include:
  1. Checking accounts
  2. Savings accounts
  3. PayPal account
  4. Stripe account
  5. PaySimple account
  6. Undeposited Funds

Checking & Savings Accounts
When configuring your checking or savings account, be sure to select an option in the "Asset Account Type" field and identify it as a checking or savings account. This will give you the option of recording a check or deposit to this account.




PayPal Asset Account
You will need to create an Asset Account for PayPal if you are using PayPal as one of your financial processors. Be sure to select "PayPal Account" as the Asset Account Type.  When a payment is received using your PayPal account, the monies will be held by PayPal until you transfer the money into your checking account. In addition to creating the PayPal account in your chart of accounts, you will need to set the Accounting Configuration for the online payments. 

TransFirst Asset Account
This is the Asset Account where your TransFirst deposits are made. If you are using TransFirst for online purchases, you do NOT need to create an Asset Account for TransFirst.  TransFirst will deposit money directly in your checking or savings account and you can set up your accounting bookkeeping to record transactions directly into your checking or savings. This is controlled in the Accounting Configuration.

Stripe Asset Account
You will need to create an Asset Account for Stripe if you are using Stripe as one of your financial processors. Be sure to select "Stripe Account" as the Asset Account Type.  When a payment is received using your Stripe account, the monies will be held by Stripe until transferred into your checking account based on the payout schedule you have chosen. In addition to creating the Stripe account in your chart of accounts, you will need to set the Accounting Configuration for the online payments. 

PaySimple Asset Account
You will need to create an Asset Account for PaySimple if you are using PaySimple as one of your financial processors. Be sure to select "PaySimple Account" as the Asset Account Type. This is the Asset Account where your PaySimple sales are recorded. When a payment is received using your PaySimple account, the monies will be held by PaySimple and will be deposited directly into your checking or savings account. In addition to creating the PaySimple account in your chart of accounts, you will need to set the Accounting Configuration for the online payments.

Undeposited Funds
The Chart of Accounts includes an Asset Account for Undeposited Funds.  This account serves as your record keeping for cash and check payments.

Liability Accounts


In your Chart of Accounts, the Liability Accounts are setup with Liability Account Numbers: 2001-2999.

Liabilities are used to categorize money that you have collected that is owed to someone else.

Examples of Liabilities include:
  1. Sales tax
  2. Membership dues owed to others
  3. Account Credit
  4. Uncategorized liability

Sales Tax
When sales tax is collected for online sales, the sales tax will be added to your liability account. Sales tax does not run through your budget. When you pay the sales tax, you will be reducing the amount in your sales tax liability account.

Account Credits
This account tracks any credits for members that are currently in your system. Example: Suzy purchases spirit wear online and then returns one of the shirts. Account administrators edit Suzy’s order showing that the shirt was returned. This now gives Suzy a credit. Administrators have the option of making the credit available for Suzy to use on a future purchase online, or they can refund the money via check.

The Account Credit ledger item shows any amount that is currently listed as an account credit that has not been used or has not been refunded.

TransFirst Liability
If you are using TransFirst for your payment processor, you will have a TransFirst Liability account. See the section on using TransFirst with the Accounting Tools for more information.


Income & Expense Accounts


In your Chart of Accounts, the Income Accounts are setup with Numbers: 4000 - 4999
 


Parent Accounts: (Also known as summary accounts.)
These are optional and allow you to roll up several accounts into one category for reporting purposes.
 
An example…Fundraising can be the Parent Account for Spirit Wear and School Supplies.





In your Chart of Accounts the Expense Accounts are setup with Numbers: 5001-5999
 
Carryover Expense
The amount of money you are planning on setting aside. These funds will serve as your Balance Forward next year.



System Default Accounts


If no Chart of Accounts is defined prior to the first transaction, the following accounts will be generated and set:
1999 - undeposited funds
2999 - uncategorized liabilities
4999 - uncategorized income
5999 - uncategorized expense

If Paypal is active and used, and the account settings for Paypal are not set up, the following will be generated:
1900 - Paypal asset account
5900 - Paypal transaction fees

If TransFirst is active and used, and the account settings for TransFirst are not set up, the following will be generated:
2910 - TransFirst transaction fees
1910 - TransFirst deposit account

If a Processing Fee is charged and the Processing Fee Income Account is not set up, the following will be generated:
4920 - Handling Fees (will be named according to their naming for processing fees)

If a Sales Tax Liability Account is not set up and a transaction causing sales tax is processed, the following will be generated:
2100 - Sales tax liability

If a Member Credit is processed and it's not configured, the following will be generated:
2200 - Account credit


Account Credits


This account tracks any credits for members that are currently in your system

Example:  A member purchases spirit wear online and then returns one of the shirts.  Admins can edit the order showing that the shirt was returned. This now gives the member a credit. Admins have the option of making the credit available for the contact to use on a future purchase, or they can refund the money. 

We recommend setting up an Account Credit ledger item that shows any amount that is currently listed as an account credit that  has not been used or has not been refunded.



Administrators can manually assign an account credit that a family can use to pay for online purchases.

For example, a booster club may allow students to participate in fundraisers with a portion of proceeds raised going back to the student to use for future purchases.

If your organization is using the Membership Toolkit accounting tools, when the account credit is added to the family's account you must also choose an expense or income budget account to allocate the funds against. If you manually remove a credit, then you must choose an income or expense account to balance the transaction.

Example: Your booster club hosts a cookie dough fundraiser and your income from this fundraiser is $4,000. The income for the cookie dough fundraiser is recognized income budget line item for cookie dough.
Sally Sue has earned $50 that she can use towards an upcoming expense. The administrator edits her account information to give her an account credit of $50. When entering the account credit, you select the expense account for Student Fundraising. The accounting journal entry will be:
  1. Liability - Account Credit is increased $50
  2. Expense - Student Fundraising is increased $50
Sally Sue buys a ticket to the Banquet and uses $30 of her account credit to make the purchase. The accounting journal entry will be:
  1. Liability - Account Credit is decreased $30
  2. Income - Banquet is increased $30
In June, Sally Sue graduates and you need to clear out her account credits. Your band policy is that all account credits not used by the end of the year will be forfeited and considered a donation to the band.You manually reduce her account credits to $0.00 The accounting journal entry will be:
  1. Liability - Account Credit is decreased $20
  2. Income - Donations is increased $20
Alternatively, you could also choose to decrease the expense line item for Student Fundraising.
You also have the ability to apply a FLAT dollar amount refund in the form of an Account Credit to each individual student listed under a user’s account, all at once ‘en masse.’ Get more information in our article on Processing Refunds by Student.


To Remove an Account Credit
If you would like to remove the account credit, you can do so from the contact card.  
  1. Go to the users Contact Card
  2. Select Directory and Account
  3. Select "add credit"
  4. Enter a negative amount to reduce the available credit


When an account credit has been issued to a user, they can view the amount by logging in and clicking on their name in the Login box. There is a tab in their Profile for Account Credits.

If you'd like to have this information visible automatically once users log in, you can display account credits directly on your home page or in an html block in your left or right rail. To do this you will add the User Credit Macro.

How to Add the User Credit Macro

Undeposited Funds (aka the Cash Box)


The Chart of Accounts includes an Asset Account for Undeposited Funds.  This account serves as your record keeping for cash and check payments.

When an order in your Membership Toolkit account is marked as paid and the cash method of payment collected is either cash or check, those funds will be deposited into your Undeposited Funds Asset Account. This shows that the money has been collected but not deposited into your checking or savings account.

When you actually deposit the checks or cash into your checking or savings account:
  1. Go to the Accounting / Summary tab and select the "bank deposit" button.
  2. On the deposit screen, select a deposit account (checking or savings)
  3. Enter the date of the deposit.
  4. If there is cash in the deposit, enter the amount of cash being deposited.
  5. Checks that have been recorded into Undeposited Funds will be presented in a list. Select the checks that are included in the deposit.
  6. Hit record deposit.

Notes:  When you enter the deposit, it will be moving money collected and entered into your Undeposited Funds into your checking or savings account.  Your Undeposited Funds account will be decreased and your Checking Account will be increased. 


Ledger Accounts & Amounts for Income


For each SKU in your catalog, you can specify up to six account ledgers to distribute income into from your sales.  You may only choose from income and liability accounts and all amounts must add up to the sales price for the SKU.  If multiple or custom prices are allowed for the SKU, all income will be allocated to just one account.

  1. Go to Store & Forms / Catalog / Select or Create the SKU.
  2. Go to the Sales Information tab.
  3. Under "Ledger Accounts & Amounts for Income" use the drop down menu to specify the allocation of the sales price to up to 6 different accounts in your budget Chart of Accounts.
  4. Enter the amount that is allocated to each account.

Please Note:  This feature only allocates the income to the appropriate budget account.  It does NOT deposit into your checking account or any other asset or expense account.  That has to be done on the Accounting tab.




990-EZ Code Box


You have the ability to assign a 990-EZ code to both Income and Expense accounts in your Chart of Accounts.  This code will correspond to the box on the IRS form 990-EZ where the account item's activity should be reported.

To assign a 990-EZ code to an Income or Expense account:
  1. Go to Accounting / Accounts.
  2. Select the blue account number for the account you want to assign a code to.
  3. Scroll down to the "Form 990-EZ Box" field.
  4. Select a code from a valid entry on the drop down list that you’d like to associate with the IRS 990-EZ Form for that category.
  5. Save.

  1. 990-EZ codes can be entered at any time.
  2. See the IRS 990-EZ Instructions or talk to your state representative or accountant if you are unsure where an account category should be reported.
  3. Membership Toolkit provides a report (990-EZ Information Report) that summarizes the transactions that add up to the amount that is reported on each line of the 990-EZ Form, but it is the responsibility of your organization to ensure that the activities are being assigned correctly.


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