Understand accounts, categories, and funds

These three ideas answer different questions. Keeping them separate makes transaction review and reports easier to understand.

123

Financial accounts: where money is held

A financial account represents something such as your checking account, savings account, credit card, or petty cash. Open Accounts to see its activity. A bank account may hold money belonging to several funds.

Categories: what the transaction is

Categories are entries in your chart of accounts, also called ledger accounts. Examples include Contributions, Utilities, Office Supplies, and Youth Events. They explain the type of income or expense; balance-sheet categories describe what your church owns and owes.

Funds: what the money is for

A fund tracks resources by purpose or restriction. Operating and Missions might be separate funds even when their money sits in the same checking account.

A church example

For an illustrative $120 youth-event purchase, the financial account might be Checking, the category Youth Events, and the fund Operating. If the purchase uses donor-restricted youth money, select the appropriate restricted fund instead, consistent with the gift’s terms.

Keep the distinctions clear

A budget amount, fund balance, and bank balance measure different things. None should be treated as interchangeable. See Understanding bank and book balances and Reading fund balances.