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Tool: Glossary of accounting terms

Essential Accounting Terms for Not-for-Profit Organizations

  • A-133 audit - an audit required for not-for-profits that receive $25,000 or more in federal funding during a fiscal year.
  • Accounting - a system for providing financial information about a business or other type of organization.
  • Accounting procedures manual - a record of the policies and procedures for handling financial transactions.
  • Accounting system - accounting records (checkbooks, journals, ledgers, spreadsheets , etc.) and processes and procedures assigned to staff, volunteers, and/or outside professionals.
  • Accrual-basis accounting - accounting procedure that reports income when it is earned and expenses when they are incurred.
  • Asset - something with economic value owned by an organization.
  • Auditing - the testing of an organization's accounts for accuracy and completeness by people who had no part in their preparation.
  • Bookkeeping - the practice of recording business accounts and transactions.
  • Cash-basis accounting - accounting procedure that records revenue when the cash is received, and records expenses when they are paid.
  • Cash disbursement journal - a chronological record of checks that are written, categorized using the chart of accounts.
  • Cash receipts journal - a chronological record of all deposits that are made, categorized using the chart of accounts.
  • Chart of accounts - a list of each item that the accounting system tracks.
  • Compilation - a report prepared by an accountant organizing financial data supplied by the organization into standard financial reporting formats; does not include a review of the numbers for accuracy or analysis.
  • Depreciation schedule - a schedule of the decline in value of certain items the group owns.
  • Financial Accounting Standards Board (FASB) - The professional quasi-regulatory organization with primary responsibility for determination of financial reporting standards in the United States. The Securities and Exchange Commission has the power to override FASB standards.
  • Fund accounting - a ledger, fund, department and project-tracking system for not -for-profit organizations. Fund accounting includes batch posting for all transactions , with safeguards that prevent the user from quitting posting unless debits and credits balance. Posts to previous, current, or future periods in the current fiscal year . Tracks funds from sources/donors, and maintains budgets and balances for both departments and departmental projects. Produces fund statements, revenue expense statements , budgets, and fund and project listings.
  • General journal - a record of all transactions that do not pass through the checkbook , including non-cash transactions (such as depreciation) and corrections to previous journal entries.
  • General ledger - a book of final entry summarizing all of a company's financial transactions.
  • Generally accepted accounting principles (GAAP) - established accounting rules in the United States administered by the Financial Accounting Standards Board (FASB ) and Governmental Accounting Standards Board. They are largely delineated by Statements of Financial Accounting Standards.
  • Governmental Accounting Standards Board (GASB) - organized by the Financial Accounting Foundation, GASB establishes standards of financial accounting and reporting for state and local governmental entities.
  • Journals (books of original entry) - used to systematically record all accounting transactions before they are entered into the general ledger.
  • Liability - a financial debt or potential loss.
  • New assets/worth - the assets of an organization minus its liabilities.
  • Opinion - the view of an independent Certified Public Accountant on how fairly the agency's financial statements represent its financial position and whether they comply with generally accepted accounting principles. An opinion is issued on completion of an audit.
  • Revenue/sales - total amount generated or collected from goods and services an organization provides.
  • Review - similar to an audit but more limited; a review conducts some analysis but does not undertake the extensive testing required for an audit.