Have you ever posted a journal entry in your accounting for your nonprofit and then went back later and wondered, “Why did I do that?” It’s not that uncommon, so don’t beat yourself up about it.
Sometimes outside sources, like bookkeeping services or tax accountants, prepare journal entries, so you may not be familiar with them. Other journal entries are derived from accounting schedules or payroll summaries, which are fairly routine. But whether you are the one creating the journal entry or not, make sure you understand why you are posting it. You should regularly track your journal entries and have an easy way to justify each one.
Here are some practical tips to help you keep track of your general ledger journal entries in your accounting. We recommend keeping a binder that includes the following:
- Your month-end closing procedures
- An Excel spreadsheet that tracks your journal entries (see example below)
- Any supporting documents for each journal entry (attach the documents or a note that identifies their location)
- A section for financial reports (we recommend printing reports monthly as part of your internal controls)
- A section for financial schedules (such as a depreciation schedule or amortization schedule)
This binder will help answer any accounting questions you may have in the future about your journal entries. And if you haven’t already written out your month-end closing procedures, we’ve got you covered. Here’s an example of monthly closing procedures that you can use in your nonprofit.
Need more specifics for your organization? Always consult a CPA or trusted professional if you seek tax or accounting advice.