Non-Profit Accounting With Ledger CLI, A Tutorial

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Non-profit organizations (NPOs), particularly 501(c)(3) charities in the USA,

have their own specific accounting needs.  These often differ from for-profit

accounting needs.  For example, for-profit-oriented systems often make

problematic assumptions about the workflow of accounting tasks (often because

NPOs rely primarily on donations, rather than fee-for-service or

widget-selling income).  Also, non-profit income is categorized differently

than for-profit income, and the reporting requirements vary wildly from their

for-profit equivalents.

This project is designed to provide some basic templates, tutorials, workflow

documentation and scripts to handle accounting for an NPO.  The primary

example is a

[direct project (aka Model A) fiscal sponsor NPO](http://en.wikipedia.org/wiki/Fiscal_sponsorship#Models_of_fiscal_sponsorship).

This tutorial was written primarily based on

[Software Freedom Conservancy](http://sfconservancy.org/)'s use of Ledger CLI

from 2008-10-22 to present for its own accounting needs.  While Conservancy

has done well using this system, and believes that its account system meets

Generally accepted accounting principles (GAAP), this document **does not**

constitute advice from a CPA nor legal advice for a non-profit that seeks to

comply with relevant state and/or federal accounting requirements for USA

non-profits.  The authors make no representations nor warranties regarding

this information and this information is provided for discussion purposes

only.  Readers of these tutorial and templates are urged to seek professional

advice from a CPA and/or tax legal counsel in constructing an accounting

system appropriate for your organization.

Furthermore, given the authors' limited knowledge of accounting requirements

outside the USA, the suggestions herein probably are not particularly useful

at all for organizations outside the USA.

Configuration of Chart of Accounts

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accounts".  The first time I heard this phrase, I thought it was something

complicated.  Fact of the matter is, it's really just a list of all the

accounts that you use.  Accountants also use "account codes", which, as near

as I can tell, are of primary interest because they get better sorting.

Ledger CLI doesn't really support account codes, so I've ignored them.

The real place that Ledger CLI stores your chart of accounts is if you use

the `account` directive along with the `--pedantic` CLI option.  This will

ensure that only accounts you declared explicitly will used.

### Asset Accounts

Asset accounts represent anything that's owned.  Typically, these are

primarily your cash accounts, or anything that's completely liquid.

Many accounting tutorial materials will note that loans, accounts receivable

and other receivables are assets as well.  Most accountants will

say that they are, but with regard to accounts called "Assets", this system

uses the account hierarchy `Assets:` only for tangible, liquid,

cash and/or cash-equivalent assets.  You'll find that account hierarchy

commonly in the examples herein.

### Liabilities Accounts

Similar to assets, most accountants will point out that any amount owed to

someone else is a liability, and that is of course accurate.  Like with the

`Assets:` hierarchy, this system uses `Liabilities:` hierarchy only to refer

to formalized accounts, such as credit cards, where a monthly statement is

sent and have an ongoing liability relationship with the organization.

### Accrued Accounts

For items that are receivable or payable, this system uses `Accrued:`

hierarchy.  Under this top-level account, you'll find accounts payable,

accounts receivable, loans payable and loans receivable.

### Expense Accounts

These accounts contain any expense of the organization, and all begin with

`Expenses:`.

### Income Accounts

These accounts contain any income of the organization, and all begin with

`Income:`.

### Unearned Income Accounts