What is Fund Accounting in QuickBooks

Fund accounting in QuickBooks is a way of managing financial transactions and reporting for non-profit organizations, government agencies, and other organizations that need to track multiple funds. Fund accounting involves tracking the income, expenses, and balances of each fund separately to ensure that money is being used in accordance with the organization’s goals and donor restrictions.

In QuickBooks, fund accounting can be accomplished by setting up each fund as a separate class, and then using class tracking to assign income and expenses to the appropriate fund. This allows the organization to generate reports that show the financial status of each fund, as well as overall financial reports for the organization as a whole.

QuickBooks also provides features such as budgeting, grant tracking, and donor management that are useful for organizations that need to manage multiple funds. By using QuickBooks for fund accounting, non-profit organizations, and other entities can ensure that their financial records are accurate, transparent, and in compliance with any regulatory requirements.

QuickBooks Chart of Accounts Setting

The Chart of Accounts in QuickBooks is a list of all the accounts used by a company to record financial transactions. It is the foundation of the accounting system and provides a framework for organizing and reporting financial data.

To set up the Chart of Accounts in QuickBooks, you will need to follow these steps:

  1. Open QuickBooks and go to the Lists menu.
  2. Select Chart of Accounts.
  3. Click on the New button to create a new account or the Edit button to modify an existing account.
  4. Choose the account type from the drop-down menu. QuickBooks offers several account types, such as Bank, Credit Card, Income, Expense, Asset, Liability, and Equity.
  5. Enter the account name, account number (optional), and description.
  6. If necessary, select a sub-account or parent account.
  7. Set the opening balance for the account, if applicable.
  8. Choose the tax line mapping for the account, if necessary.
  9. Click Save and Close to save the changes.

When setting up the Chart of Accounts in QuickBooks, it is important to keep the following best practices in mind:

  • Use a consistent naming convention for accounts to make it easy to find and understand them.
  • Keep the Chart of Accounts as simple as possible, with only the accounts that are needed to run the business.
  • Group similar accounts together to make it easier to generate financial reports.
  • Use account numbers to help organize and group accounts.

By setting up the Chart of Accounts in QuickBooks correctly, you will be able to track your financial transactions accurately and generate meaningful financial reports that help you make informed business decisions.

How to Set up Fund Accounting in QuickBooks

To set up Fund Accounting in QuickBooks, you will need to create a separate class for each fund. Here are the steps to set up Fund Accounting in QuickBooks:

  1. Enable Class Tracking: To enable Class Tracking, go to Edit > Preferences > Accounting > Company Preferences, and select the Use Class Tracking option.
  2. Create Classes for each fund: To create a new class, go to Lists > Class List, and click on the New button. Enter the name of the fund in the Class Name field and click OK. Repeat this process for each fund.
  3. Assign Classes to Transactions: When you enter a transaction, you can assign a Class to it. To do this, open the transaction and select the appropriate Class from the Class drop-down menu. This will associate the transaction with the correct fund.
  4. Generate Reports by Class: To generate financial reports by the fund, you can use the built-in Class tracking reports in QuickBooks. To do this, go to Reports > Company & Financial > Profit & Loss by Class, Balance Sheet by Class, or any other report that supports Class Tracking. Select the desired report and select the Class filter to display the report by the fund.

With Fund Accounting set up in QuickBooks, you will be able to track income and expenses for each fund separately and generate reports for each fund as needed. This will help you ensure compliance with donor restrictions and other regulations, and provide transparency in your financial reporting.

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