Record Transactions In General Ledger (fund accounting)
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- čas přidán 24. 07. 2024
- Free Email Course: aplos.us/email-course-free
Hey, this is Alex from the Aplos Academy. Today we're gonna take a look at transactions in a general ledger - what they are, how and when you record them, and how they impact your nonprofit accounting system. If you've created a nonprofit chart of accounts, and are ready to record transactions in your ledger, this is the video for you.
So how do you record transactions using your accounts? Accounts work together in a system, which is called double-entry accounting. This basically means there are two sides to every transaction: money coming from somewhere and money going somewhere else.
Before we move forward, forget everything you know about the terms debit and credit. They don’t refer to your debit and credit cards, and they don't even necessarily mean debiting or crediting an account. In accounting, debit, and credit mean something completely different than what you've ever learned. You're welcome.
Every transaction has a debit and a credit amount, and these amounts will always equal each other, which is where the term double-entry accounting comes from.
There are five types of accounts, and each one is increased or decreased by debit or credit. If you're increasing an asset or an expense account, you would use the debit column. For increasing liabilities, income, and equity, you would use the credit column.
I promise that if you can mentally memorize this chart, it will make all entries you have to record in any accounting system super easy.
Let's take a look at an example so you can see how this actually plays out.
Let's say you go to the store and you buy some supplies - some paper, pens, and a stapler that all add up to 50 dollars. When recording this purchase, you're going to use one of your expense accounts since that’s how you record the money you spend. In this case, you choose the expense account “office supplies.” Since expense accounts are increased by debits, you're going to put the $50 in the debit column next to the office supplies account.
So now you have a debit but are missing a credit.
What is the other side of this transaction when doing double-entry accounting? Well, if you purchase these supplies with money from your checking account, your checking balance is being reduced. Therefore, the other side of this transaction would be your asset account, checking, for the credit amount of 50 dollars.
Again, since the expense account is being increased, it's going to be on the debit side, and since the asset is being decreased, it's on the credit side. The debit is 50 and the credit is 50. They both equal each other, so there's your transaction. Welcome to recording transactions!
Let's say you go to the store and you buy some supplies - some paper, pens, and a stapler that all add up to 50 dollars. When recording this purchase, you're going to use one of your expense accounts since that’s how you record the money you spend. In this case, you choose the expense account “office supplies.” Since expense accounts are increased by debits, you're going to put the $50 in the debit column next to the office supplies account.
So now you have a debit but are missing a credit.
What is the other side of this transaction when doing double-entry accounting? Well, if you purchase these supplies with money from your checking account, your checking balance is being reduced. Therefore, the other side of this transaction would be your asset account, checking, for the credit amount of 50 dollars.
Again, since the expense account is being increased, it's going to be on the debit side, and since the asset is being decreased, it's on the credit side. The debit is 50 and the credit is 50. They both equal each other, so there's your transaction. Welcome to recording transactions! That’s double-entry bookkeeping, and it's a necessary part of any accounting system.
So how do you record these transactions? This happens in one of two ways: either by hand or through the use of some sort of software.
Obviously, it’s usually easier to enter transactions in software. But if you do want to record things by hand you will need to keep in mind a few things. First, all of your transactions need to be recorded using the double-entry standards. This means keeping up with a paper or excel version of a general ledger to make sure debits and credits are in balance, by fund, with every transaction. Second, you would then need to make sure those accounts are totaled somewhere more concisely so that you can easily track their balances.
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I have cried twice in my life. Once when I was seven and I was hit by a school bus, and then again after watching this video. Thank you Alex.
You’re the only person that has been able to explain debit/credit calmly and thoroughly ! Thank you😭
Nice video Alex! Thank you for breaking down the debits and credits, very helpful!
My god you make this seem easier than I thought it'd be . . .
This is so helpful. I'll have to memorize that chart with debits and credits!
Thank you so much for the simplified explanation. Everything makes sense. Keep posting🙏
This makes debits and credits so easy to understand.
Super helpful! Thanks so much for making this training available!
You are very welcome.
I so needed to understand this! Thank you!!
I took a job in non profit after working in for profit for years. I start in a few days and dont know shit about non profits. This video made me feel much better. Looks pretty much the same except some extra classifying involved. Thank you so much. Thumbs up. Ill let you know if i get fired
Ohhh!! So THAT'S how you do it... Makes sense! Thanks!
Super helpful and informative, thank you!
Glad it was helpful!
Very helpful information 👍🏻
Fantastic work!
Very helpful! Thank you
It's very helpful for my assignment 🤗🙏
This is Fantastic information! Thank you!
Also my nose itches.
Glad it was helpful!
This is super helpful!
Thank you!
So helpful!!
Glad it was helpful, Ashley.
Thank you
Thanks
handsome teacher....
Wait...so ...this isn't Quickbooks?
Can you do an explanation of the system in Arabic?
Unfortunately, we don't speak Arabic.
Just get to the point..damn all you people wanna talk nonstop unnecessarily