Fund accounting is an accounting method used to determine accountability rather than the profitability of an organization. Fund accounting helps organizations properly recognize revenue and expenses for each individual program.What makes a fund an independent accounting entity?
Each fund is an independent accounting entity, where accounts are maintained to make sure that the funds are used for their intended purposes. Government and nonprofit organizations often receive money that they are required to use in a specific way.What do you need to know about fund accountancy?
Fund Accountancy 1 Types of Organizations Using Fund Accountancy Methods. ... 2 Objectives and General Practices of Fund Accountancy. ... 3 Fund Categories. ... 4 Legal and Quasi-Legal Considerations. ... 5 Nonprofit and Government Accountancy Certification Credentials. ... 6 Fund Accountancy Careers. ...How are grants recorded in a nonprofit account?
For instance, if your nonprofit has received three grants, each one of those grants will need to be recorded in the temporarily restricted fund account, since the grant has an expiration date (we’ll explain why later). But you will also be tasked with creating a separate cost center for each grant in order to manage the funds properly.