Additional Account Categories

What are Additional Account Categories?   I'm glad you asked.  They are categories that are not included in traditional accounting and are not required to complete the chart of accounts.  In The Financial Edge there are four additional account categories available: Transfer, Gifts, Gains and Losses.

Transfer accounts are used for interfund transfers.  These accounts are treated like expense accounts and are closed into the fund balance account at the fiscal year end.

Gifts accounts are used for recording donations from constituents.  These accounts are treated like revenue accounts and are closed into the fund balance account at the fiscal year end.

Losses accounts are used for recording losses such as on the disposal of assets or on the sale of marketable securities.  These accounts are treated like expense accounts and are closed into the fund balance account at the fiscal year end.

Gains accounts are used for recording gains such as on the disposal of assets or on the sale of marketable securities.  These accounts are treated like revenue accounts and are closed into the fund balance account at the fiscal year end.

These additional account categories are provided to allow flexibility in the chart of accounts setup.  If you decide to use these additional categories, here is how your accounting equations would work:

Balance Sheet:  Assets = Liabilities + Fund Balance (or Net Assets)

Income Statement:  Net Surplus/Deficit = (Revenue) - (Expense) + (Gifts) - (Transfers) + (Gains) - (Losses)

I hope this helps you decide if the additional categories will be useful for your chart of accounts.