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Bookkeeper 101

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Bookkeeper 101

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  1. Bookkeeper 101 Presented By: Julie Laughlin Office of Accounting Services Archdiocese of Indianapolis

  2. Accounting Definitions • Accounting- The system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results. • Accounting Equation Assets = Liabilities + Fund Balance • Assets - Things the business owns that have monetary value into the future. They carry a normal debit balance. • Cash- Money or the equivalent to money that the entity has control of at a particular time. It is considered an asset and carries a normal debit balance.

  3. Accounting Definitions • Liabilities- Debts and accounts that are payable to creditors. Liabilities carry a normal credit balance. • Fund Balance - The accumulated, undistributed earnings of a parish. • Expenses - Costs of doing business or resources the entity used up to earn revenue. Expenses carry a normal debit balance • Revenue - All the income produced by a particular source. Revenues carry a normal credit balance.

  4. Accounting Definitions • Balance Sheet -Statement of financial position that reports dollar amounts for assets, liabilities, and fund balance at specific point in time • Balance Sheet can also be referred to as the statement of financial position Assets = Liabilities + Fund Balance • Income Statement -Statement of operations that reports revenues, expenses, and net income/loss for a certain period of time

  5. Balance Sheet Accounts • Assets -Normal Debit Balance • Cash • Petty Cash • ADLF Deposit • Accounts Receivable • Prepaid Expenses

  6. Balance Sheet Accounts • Liabilities - Normal Credit Balance • Accounts Payable • Salaries Payable • ADLF Loan • Deferred Revenue • Designated Funds • Fund Balance - Debit or Credit Balance

  7. Income Statement Accounts • Revenue • Sunday & Holy Day Collections • Mission Collections • Donations • Tuition • Fundraising • Program & Instructional Fees • Interest Income (Checking or ADLF Account) • Endowment Income

  8. Income Statement Accounts • Expenses • Salaries • Benefits (FICA, Health Insurance, Worker’s Comp, Retirement) • Training • Assessments • Bank Fees • ADLF Interest • Office Supplies • Utilities • Program Expenses • Property & Facilities

  9. Accounting Examples - Petty Cash • Petty Cash - Balance should be no more than $200 and used to reimburse employees for expenses $25 or less • To Set up Petty Cash Debit Petty Cash (Asset) Credit Cash (Asset) • To Reimburse Petty Cash -Make check out to Custodian of Petty Cash - NOT to Cash Debit Expenses Credit Cash (Asset)

  10. Accounting Examples - ADLFArchdiocesan Deposit and Loan Fund • Deposit to ADLF Accounts Debit ADLF Savings Account (Asset) Credit Cash (Asset) • Record Interest Debit ADLF Savings Account (Asset) Credit Interest Income (Revenue) • ADLF Withdrawal Debit Cash (Asset) Credit ADLF Savings Account (Asset)

  11. Accounting Examples - ADLFArchdiocesan Deposit and Loan Fund • Use ADLF Savings for Building Projects Debit Building/Construction Expense Credit ADLF Deposit Account (Asset) • Record ADLF Loan Debit Building/Construction Expense Credit ADLF Loan Payable (Liability) • Record ADLF Loan Payment Debit Loan Payable (Liability) Debit ADLF Interest Expense Credit Cash (Asset)

  12. Accounting ExamplesRecording Tuition Revenue • Tuition revenue must be divided into four different categories for reporting purposes: • Catholic - Parishioner • Catholic - Non-Parishioner • Non-Catholic • Other Instructional Fees • Debit Cash (Asset) Credit Tuition Revenue • All Daycare revenue for parishes with no schools and Religious Education record to Other Program & Instructional Revenue

  13. Accounting ExamplesRecording Payroll • Record from Semi-Monthly Payroll Summaries Debit Salaries Expense Debit FICA Expense Debit Service Fee Expense Credit Cash (Asset) • Record Salaries in appropriate department - School, Faith Formation, Parish Life, etc.

  14. Accounting ExamplesAccruals • Parishes generally use cash basis - when cash is received or disbursed, a transaction affects the general ledger • When significant work is done before end of fiscal year is closed and not paid for until the following year, need to accrue as follows Debit Expense Credit Accounts Payable (Liability) • When vendor is paid Debit Accounts Payable (Liability) Credit Cash (Asset)

  15. Accounting ExamplesEndowment Distributions • Endowments should not be recorded as asset and do not record realized or unrealized gain (loss). • Distributions are sent via direct deposit quarterly, semi-annually, or annually. • Only record endowment distribution Debit Cash (Asset) Credit Endowment Revenue

  16. Revenue Sunday & Holy Day Contributions Tuition-Catholic-Parishioner Tuition-Catholic-Non-parishioner Tuition-Non-Catholic Contributions Revenue Other Program & Instructional Rev Interest Income Total Revenue 100,000 12,000 2,500 1,000 400 50 150 $116,100 Income Statement Example

  17. Expenses Salaries Expense FICA Expense Health Insurance Property Insurance Retirement Worker’s Compensation Cathedraticum Total Expenses Revenue less Expenses $116,100 - $37,425= $78,675 = Change in Fund Balance from Prior Year to Current Year 23,000 1,225 1,000 1,400 650 150 10,000 $37,425 Income Statement Example

  18. Assets: Cash 61,475 Petty Cash 200 ADLF Deposit 22,000 83,675 Total Assets: $83,675 Liabilities: ADLF Loan 5,000 Accrued Payroll 1,250 Total Liabilities 6,250 Fund Balance: Beg. Balance 5,000 Net Income 78,675 Ending Balance 83,675 Total Liabilities + Fund Balance:$83,675 Balance Sheet Example

  19. Nonprofit OrganizationsFederal Tax Exempt • 501(c)(3) Group Ruling states that all Catholic organizations listed in the Official Catholic Directory are federally tax exempt. • Provide this letter (http://www.archindy.org/finance/files/parish/general/2008GroupRuling.pdf) as support that your parish, school, or agency is federally tax exempt.

  20. Nonprofit OrganizationsSales Tax Exemption • ST-105 - Sales Tax ExemptionCertificate For blanket or single purchases http://www.in.gov/dor/files/st-105.pdf • To qualify for sales tax exemption, purchase must be used for the same purpose that the organization is being exempt • Meals, lodging, airfare, and purchases for social purposes are never exempt

  21. Nonprofit OrganizationsSales Tax Exemption - Utilities • For utilities (telephone, electric, gas, water) complete Form ST-200 (for each metered vendor) http://www.in.gov/dor/files/st-200.pdf • Mail completed form to Indiana Department of Revenue • Indiana Department of Revenue will issue ST-109 • Submit to utility vendor to receive sales tax exemption • Keep copy of ST-109 on file

  22. Nonprofit OrganizationsSales Tax Exemption • Form NP-20 - Indiana Nonprofit Organization’s Annual Report • Organizations must report annually to maintain sales tax exemption • Due by November 15th (15th day of the 5th month following the end of the fiscal year) • http://www.in.gov/dor/files/np-20.pdf

  23. Charitable Contributions • Archdiocese recommends providing contribution statements to parishioners at least annually even to those who give nothing • IRS requires a written acknowledgement for one-time contributions of $250 or more • If checks are made out to the Mission Office or special collection directly, the receivingorganization provides the written acknowledgement. The parish is responsible for the acknowledgement of all checks made out to the parish.

  24. Charitable Contributions • If an individual receives a benefit from the contribution, this must be deducted from the acknowledgement letter. (Example: $100 ticket from fundraising dinner, $25 is the fair market value of dinner, charitable contribution is $75) • Contributions NOT deductible: • Value of time or services • Contributions from which you benefit • Contributions made to a specific individual • Payments to a member of the clergy to spend as he wishes, such as for personal expenses • Expenses paid for another person to provide services to a qualified organization

  25. Annual IRS Tax Forms • Must provide 1099-MISC to report payments of $600 or more in a calendar year to unincorporated individuals not treated as employees or an entity for services performed • 1099-MISC postmarked by January 31st • Copy A to IRS by February 28th

  26. Internal Controls • Parish Internal Control Assessments (PICA) • Performed by independent CPA firms • Once every three years • Cover critical areas identified in our internal control policy • Internal Control Policy http://www.archindy.org/finance/files/parish/parish-finance/ic_policy.pdf