Mastering Church Accounting & Bookkeeping
A financially accountable church is a trustworthy church. Mastering Church Accounting & Bookkeeping today!
‎Accounting or book keeping is defined as the art of recording business transactions in a chronological order (as they occur; one after the other), to show the true position of the business or organization at any given point in time. In accounting, we have some terms which I’ll like to define for better understanding, Mastering Church Accounting & Bookkeeping.
1. Principle of Double Entry: It is a method of recording every business transactions in at least two accounts, as a debit or credit. The principle of double entry of business transactions must be maintained, that is to say, a debit entry must have a corresponding credit entry, and likewise a credit entry must have a corresponding debit entry for the account to be balanced.
2. Debit Entry: These are also business transactions usually recorded on the debit side of receipts and transactions account.
‎3. Credit Entry: These are also business transactions usually recorded on the credit side of receipt and payments account The church accounting falls under Non-profit making organization and there are usually three types of accounts to be prepared, namely:
• Receipts and payment account In this account all receipts such as tithes, general offering, donation, levies subscriptions, etc are recorded on the debit (left) side of the account that were actually received within the accounting period. At the same time, all payment such as salaries and wages, rent, purchase of assets, purchase of instruments, crusade expenses, transportation, etc. are recorded on the credit (right) side of the account that were actually paid within the accounting period.
• Income and Expenditure Account In this account are recorded the detailed summary of all income and expenditure received or not received, and paid or not paid that are related to the accounting period being considered. Also all income received and payments made that are not related to the current accounting period must be excluded. The difference between the debt and credit sides of this account is known as surplus or otherwise deficit as the case may be, if the debt side is higher than the credit side.
• Balance Sheet/statement of financial position In this account, you have the liabilities (debit side) that have the records of creditors to the church/organization and on the credit side you have taxed assets-cars, buses, building etc and current assets stocks, debitor, cash on hand, etc. And the difference between the credit and debit sides is known as capital funds which is usually on the debit side (liability), Mastering Church Accounting & Bookkeeping.
Furthermore, we must know that there are two types of accounting, namely:
‎a. Accounting for non-profit making organizations: It is a unique process whereby non-profit organizations plan, record, and report their finances. Non-profits focus more on the accountability aspect of accounting. Examples: Churches, NGOs etc.
b. Accounting for profit making organizations: They primarily focus on earning profit. Examples are limited and unlimited companies. In this write up, we are looking at the non-profit making organizations, especially church accounting.
‎CHURCH ACCOUNTING
This involves planning, organizing, and recording recording all finances for your church. Churches are classified as non-profits, meaning your accounting must focus on accountability instead of making a profit.
‎Income for your church will include the following:
1. Recording tithes, offerings, donations and pledges.
2. Managing and reconciling bank accounts.
3. Preparing and presenting financial reports (balance sheet, income statement, cash ow statement).
4. Creating and monitoring church budgets.
5. Processing payroll for church staff and clergy.
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