While subheadings are optional and customizable, the primary account headings within your chart of accounts cannot change or move. These headings represent the types that each of your core accounts fall under. A core account cannot live under a heading that doesn't match its type.
- Assets are your property, like cash (checking and savings accounts), furniture, and buildings.
- Liabilities are debts that you owe, like bills and loans.
- Net Assets
- These accounts are your church's net worth or equity. What you own (assets) minus what you owe (liabilities) equals your net assets. There are three types of net asset accounts: unrestricted, temporarily restricted, and permanently restricted.
- Unrestricted— Use this for donations that have no specifications or restrictions on them. There is only one unrestricted net asset account per fund. The unrestricted net asset account for each fund is the balancing account that shows your normal operations. Revenues and expenses close into this account at the end of the year.
- Temporarily Restricted— Use this for donations that are designated for a project that has a limited duration. For example, a fund for a new recreation center collects donations for only 6-9 months.
- Permanently Restricted— These accounts are used for endowments. Money donated to the church can earn interest while the principal amount remains in the bank. The interest can be spent but the principal cannot.
- Revenues are what you receive from contributions or sold assets.
- Expenses track operating costs, like utilities, maintenance expenses, and salaries.