Accounting for charities is very important as they're handling the money of the public. Donors have the right to know how their donated money was spent. Above all, charity accountants should be aware that business and charity accounting is not the same. Some laws and regulations must be followed when accounting for charities. In charity accounting there are four different types of funds:
- Unrestricted funds: these are funds that charity trustees can use for their personal use
- Designated funds: these are unrestricted funds that trustees have put aside for a specific purpose
- Restricted funds: these are funds given to a charity for a specific purpose and must be used for that purpose
- Endowment funds: these are funds given to a charity representing capital. Funds like these are to be invested or used for other charitable...