Many people who do the accounting at churches do it on a volunteer basis and they really don’t have the foggiest clue about accounting. For those people I recommend some accounting software for churches. This type of software will guide you in making the right accounting decisions. However, even with some specialized software you will likely have to do some research: like figuring out what the difference double entry accounting is.
Double Entry Accounting
To understand double entry accounting you must first understand this relationship: Assets = Liabilities + Owners Equity. That is the equation upon which accounting is built and it must always be in balance. In a nutshell an asset is an item that will provide probable future benefit. If you purchase new chairs for your church, the chairs are considered assets. Let’s say that the chairs cost $100 so you would have to mark down $100 for assets.
(Assets) Chairs $100
Now your equation is out of balance! Hence the need for double entry accounting. If you purchased the chairs with a note payable (a liability) then to balance your equation you have to make another entry.
(Liabilities) Note Payable $100
Every time you change part of the equation, you must change a separate part. In other words, for every financial transaction you make, you will have two entires (double entry accounting).
Good luck keeping your church’s books balanced.
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