Accounting Records

Question 1

Accounting records are the first of the

Answer 1

four building blocks of financial management.

Question 2

Every organization must keep an accurate and complete record of all financial transactions that take place so

Answer 2

they can show how funds have been used.

Question 3

Accounting records include both the

Answer 3

physical paperwork (such as receipts and invoices) and the books of account where the transactions are recorded and summarized.

Question 4

Why do organizations need accurate and complete accounting records?

Answer 4

There are two key reasons for keeping accounts:

accountability and transparency

management information

Question 5

It is a legal requirement for all organizations to

Answer 5

maintain a record of financial transactions for public scrutiny

Question 6

Organizations that fail to submit annual accounts with regulatory bodies can

Answer 6

face penalties

Question 7

Keeping records means that organization can be

Answer 7

accountable to funders.

Question 8

All managers need regular updates to

Answer 8

help them manage their projects and programs

Question 9

Accounting records are a key part of

Answer 9

the financial systems of an organization.

Question 10

Credit transactions

Answer 10

There is a time delay between the receipt of goods or services and payment.

For example: signing for bags of cement from a builder’s merchant on account, or receiving office supplies from the stationery shop with a goods delivery note. The actual payment will follow later when the builder’s merchant or stationery shop sends an invoice for all the goods purchased that month.

Question 11

receipts and payments report

Answer 11

This shows the movement of cash in and out of an organization under different categories (accounts) and the cash available at the start and end of the reporting period. It does not show the value of an organization’s assets and liabilities.

Question 12

receipts and payments report example

Answer 12

Check your phone photos

Question 13

Many smaller organizations use a “halfway-house” approach to accounting, because they cannot

Answer 13

afford to employ qualified accountants.

Question 14

To run a project, you need to buy a

Answer 14

wide range of goods and services,

Question 15

Account codes are used to…

Answer 15

…classify financial transactions in the financial accounting records,

…summarize budgets using standard and consistent descriptions,

…create management accounts to monitor spending and report to funders using standard accounting codes, and

…check accounting records for consistency and accuracy.

Question 16

descriptive

Answer 16

وصفي

Question 17

When financial transactions are entered in the

Answer 17

accounting records, they are categorized by using these two codes.

accounting code

cost center

Question 18

The account codes identify the type of expense transaction, while the cost center codes answer the question,

Answer 18

“Which project, department, or funder does this activity belong to?”

Question 19

if you would like to know what your organization spent on staff training in all projects during the year, you can

Answer 19

specify the account code for staff training and get the details for all cost centers (or projects) for the year.

Question 20

Grant received related to

Answer 20

account code

Question 21

vehicle maintenance related to

Answer 21

account code

Question 22

CEO salary related to

Answer 22

account code

Question 23

Keeping accounts is about finding a way to store financial information so that an

Answer 23

organization can show how it has spent its money and where the funds came from.

Question 24

Accounting records fall into two main categories.

Answer 24

Supporting Documents

Books of Account

Question 25

The books of account are used to

Answer 25

keep track of all financial transactions.

While these were historically physical books or ledgers, accounting data is now usually kept on a computer, either in a spreadsheet format or using an accounting software program.

Question 26

Source Documents look like

Answer 26

Cash receipt or voucher for money received

Cash receipt or voucher for money paid

Vendor or supplier invoice or bill

Banking slip for cash paid to bank

Bank statement

Journal voucher (for adjustments)

Question 27

Secondary Documents

Answer 27

Payment voucher

Purchase order

Staff expense claim form

Goods received note (GRN)

Question 28

Sometimes it is not possible to get a receipt from a vendor. In those cases, an organization needs an

Answer 28

internal receipt process to create a valid receipt. Usually, this will take the form of a self receipt document where the transaction details are recorded and signed by both parties (payer and receiver).

Question 29

Organizations should only use internal or self receipts for

Answer 29

small cash payments, in circumstances where there is no other alternative.

Question 30

What makes a VALID cash receipt?

Answer 30

An original document (not a photocopy)

• Dated
• On official stationery and/or
• Stamped and/or signed by at least one party to the transaction

Question 31

The books of account are used to keep track of

Answer 31

all financial transactions. These were historically physical books or ledgers, but accounting data is now usually kept on a computer, either in a spreadsheet or accounting software.

Question 32

A cashbook/bank book/cash analysis book, one for each bank account, that records

Answer 32

information from checks, transfer documents, bank statements and bank paying in-slips

Question 33

salaries or wages books, a tracker for

Answer 33

calculation and recording of staff salaries

Question 34

fixed assets register, which records things like

Answer 34

property, and expensive equipment used to conduct an organization’s business, like a vehicle or a computer

Question 35

stock register, which is an inventory of materials that will be

Answer 35

used up as part of an organization’s work, like seeds or tools for an agriculture project

Question 36

A transaction could be a lot of different things, from a

Answer 36

payment from a funder to the purchase of a hotel room for traveling staff, purchasing computer equipment for a project, or in-kind donations for a project (like rice to be distributed in an emergency response).

Question 37

Remember, every financial transaction needs a

Answer 37

source document of some sort.

Question 38

Cash receipts go into the

Answer 38

petty cash book.

Question 39

Receipts for money paid or received and bank statements and

paying-in slips go into the

Answer 39

cash or bank book. The petty cash book information is also included in the cash or bank book.

Question 40

Invoices and journal vouchers flow into

Answer 40

various other ledgers and day books.

Question 41

The general or nominal ledger is a central record that pulls together all the

Answer 41

bookkeeping information from the books of original entry.

It is the central record that is used to sort financial information and is especially useful when an organization has several projects and multiple donors requiring different reports.

Question 42

The general ledger has one page or one account for each

Answer 42

category of income, expenditure, assets, and liabilities.

Question 43

The general ledger is also the basis for preparing the

Answer 43

trial balance, which is the starting point for financial reports.

Question 44

There are three key aspects to procurement, the 3 Ps:

Answer 44

process, people and paperwork.

Question 45

A range of people initiate and/or authorize each stage of the process. The higher the value and risk involved, the more people should be involved to

Answer 45

protect the process from fraudulent activity.

Question 46

For example, when purchasing a high value item, such as a vehicle, it is usual to

Answer 46

include a purchasing panel (purchase committee) to ensure objective supplier selection.

Question 47

Why is it important for NGOs and non-profits to keep accounting records?

Answer 47

to demonstrate how funds are used to to accomplish the organization’s mission

Question 48

Which of the following is one of the 3 Ps of procurement?

Answer 48

Process