Files @ ddf29b6c109b
Branch filter:

Location: NPO-Accounting/npo-ledger-cli/

Create top-level books.ledger for the entire books of the org.

Really, the right place to include the configuration is from here, not the
individual files.
Non-Profit Accounting With Ledger CLI, A Tutorial

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](

This tutorial was written primarily based on
[Software Freedom Conservancy]('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

The first thing any accountant will ask to see if your so-called "chart of
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

### Income Accounts

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

### Unearned Income Accounts

`Unearned Income:` accounts are used to refer to revenue that is currently
received for services which have not yet been delivered.  The most typical
and common place an NPO encounters this type of income is for conference
registrations.  Since conference registrations arrive in advance of the
conference, it is not proper under accrual accounting to call it income until
such time as the conference successfully completes.

### Reporting The Chart of Accounts

[`general-ledger-report.plx` script in the `non-profit-audit-reports` Ledger CLI contrib directory](
will generate a file called `chart-of-accounts.csv`, which is the chart of accounts.

The main command-line program though, that generates the chart of accounts
looks like this:
    $ ledger -f accounts/main/books.ledger -V -F "%-150A\n" -w -s -b 2012/01/01 -e 2013/01/01 reg

Note that this is bound by date.  Typically, it makes sense to list your
chart of accounts for a specific period (e.g., your fiscal year), since your
accounts might have some cruft in them from previous years that should now be
ignored.  (For example, if your organization simplified its chart of accounts
in later years, you don't want to report those old accounts that are no
longer used.)

Handling Fiscal Sponsorship

NPOs that do not provide fiscal sponsorship services will find this section
somewhat useless.  One of the biggest benefits of Ledger CLI is its
incredible flexibility that just does not exist in other accounting systems.
This section describes how to exploit that flexibility to provide a
separation in your books and reporting to handle earmarked accounts for
fiscally sponsored projects.

NPOs that don't need this feature can, in most cases, use the methods
described herein to deploy Ledger CLI, but should leave out the `:General:`
and `:ProjectNAME:` parts of the account hierarchy, since these are the
primary mechanisms used herein to handle the fiscal sponsorship structure.

### Earmarked Accounts

Many fiscal sponsor NPOs keep earmarked accounts for their member/affiliated
projects.  Furthermore, these projects often may either (a) terminate their
agreement with the NPO, and thus deserve a copy of their books that they can
"take away" with them, or (b) might be affiliated with *other* NPOs that also
hold accounts.  This system of earmarked accounts is designed to make it easy
for projects to have a copy of their own accounts, but not interfere with nor
even be aware of (a) the books of other member/affiliated projects, and (b)
the overall books of the entire NPO.

On the latter point, this system utilizes a directory structure and separate
`.ledger` files to separate out the different projects into different
structures.  This allows member/affiliated projects to take their data and
run `ledger` commands against it, separately and without access to the other
`.ledger` files of the NPO.

Copyright and License of This File

This specific document, the file for npo-ledger-cli, is copyrighted:
  Copyright © 2013, Bradley M. Kuhn

This document's license gives you freedom; you can copy, modify, convey,
propagate, and/or redistribute this software under the terms of either:

    * The GNU General Public License as published by the Free Software
      Foundation, Inc.; either version 3 of the License, or (at your option)
      any later version (aka GPLv3-or-later).

    * *or* the Creative Commons Attribution-ShareAlike 3.0 United States
      license, as published by Creative Commons, Inc. (aka CC-By-SA-USA-3.0)

In addition, when you convey, distribute, and/or propagate this document
and/or modified versions thereof, you may also preserve this notice so that
recipients of such distributions will also have both licensing options
described above.

A copy of GPLv3 and CC-By-SA-3.0-USA can be found in the same repository as
this file under the filenames GPLv3.txt and CC-By-SA-3.0-USA.txt.  If this
document has been separated from the repository, a
[copy of GPL can be found on FSF's website](
and a
[copy of CC-By-SA-USA-3.0 can be found on Creative Commons' website](