This quiz will test a person's church accounting knowledge.

The work around for Quickbooks and funds is to use classes. However, according to Quickbooks own site they say this about classes.

The Balance Sheet by Class report can’t classify some transactions in QuickBooks. Some of those transactions create unclassified amounts on the report.

By not classifying every single transaction's disbursements, your balance sheet will never be right. Some of the transactions that can't be classified are journal entries with unbalanced classes, a payroll liability check, and transfer of funds between two church funds.

When the church pays for a service, money leaves the organization from an asset account which indirectly lowers the equity (or fund balance).

To fully understand this question the user must understand the fund accounting principles. They would want to review the What is Fund Accounting article. Simply stated using revenue accounts has too many problems to figure out how much each church function (ie mission) has to spend or has spent.

The statement of financial position is the only report that gives you the dollar amounts as of one point in time. This is commonly called the balance sheet in for profit companies. The other financial statements like statement of activities and cash flow report show how the money came into the company and left the company. The budget report is not considered a financial report.

According to FAS Topic 958 the Statement of Activities is equivalent to the income statement that for profit industries use.

Donation revenue (or any revenue) accounts are not reported on the balance sheet.

Churches are not exempt from the UBIT (Unrelated Business Income Tax). If they have gross receipts of over $1,000.00 they must file a tax form. This pdf goes over what UBIT and gives some clear examples. As always consult a CPA for your church's unique operation.

When multiple checkbooks (or worst sub accounts of checkbooks) are used, that means the system can't do proper fund accounting. It can't take the assets account (the checkbook) and break it up into various funds - or equity pieces. Using any type of accounts in the chart of accounts to define the funds is incorrect. They belong in the equity section. To read more, check this article out.

The definition of fund accounting that is used in non profits is the following:
"Fund accounting is an accounting system for recording resources whose use has been limited by the donor, grant authority, governing agency, or other individuals or organizations or by law.[1][2] It emphasizes accountability rather than profitability, and is used by Nonprofit organizations and by governments. In this method, a fund consists of a self-balancing set of accounts and each are reported as either unrestricted, temporarily restricted or permanently restricted based on the provider-imposed restrictions."

Donation funds and accounting funds are different. You will want to review this article. Donation funds are reported on differently than accounting funds for example. Donation funds start over each year. Accounting funds carry a balance forward each year. This is just one difference.

Liabilities plus equity will equal assets. This comes down to the balance sheet equation where Liabilities + equity equals assets.

GAAP stands for Generally Accepted Accounting Principles. See the definition at the CFA Institute. Keep in mind all churches must follow GAAP.

There are two main accounting methods called cash accounting and accrual. See Investopedia.

Contributions (donations) is revenue to the church.