Understanding Accounting Terms & Concepts Used on Springly

This article provides you with simple definitions of the accounting terms you will encounter on Springly.

• Balance carried forward
• Direct allocation
• Trial balance
• Initial balance
• Statement of financial position
• Budgets & budget items
• Accounts
• Account closing
• Accrual accounting
• Cash accounting
• Petting cash account
• Profit and loss
• Receivable
• Debt
• Fiscal year
• FEC/File of accounting entries
• General ledger
• Journals
• Bank reconciliation
• Check remittance
• Breakdown/Breakdown of entries

We will update this article with your suggestions and questions.

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Balance Carried Forward

The balance carried forward entries are the entries that facilitate the link between the fiscal year that you have just closed and the new one that is opening. They allow for continuity from one year to the next, and therefore for correct accounting.

Let's take the example of your bank statement. If you have $500.00 in your bank account on December 31st, you will have $500.00 on January 1st.

As soon as a balance is not 0, it is carried forward to the new fiscal year, except for class 6 (expenses) and 7 (income) accounts which are linked to the result.

The entries for the carry-forward are generated automatically by the software at the accounting closing.

Direct Allocation

This term is used in the context of analytical monitoring, which consists of allocating a revenue or an expense to a budget.

By activating the direct assignment, you will be suggested to do this operation just after the creation of the expense or revenue entry. You can also choose to do it later.

Trial Balance

This is one of the documents available on your Springly platform.

A trial balance gives a synthetic view of all the cash inflows and outflows of your association over a fiscal year. It allows you to quickly check if the accounts are balanced.

Initial Balance

This is the state of your accounting when you start on Springly. Fill in the balances of all the accounts of your organization. This is the basis on which the rest of your accounting will be built.

The initial balance can be set from Settings > Accounting, in the "General Settings" section.

Statement of Financial Position

The Statement of financial position is an essential accounting document. It illustrates the economic situation of the organization according to its assets and liabilities.

To put it simply, let's say that:

• Assets represent what the organization owns, which generates a positive value.
• Liabilities correspond to "obligations" towards a third party, which is a negative economic value for the organization.

A statement of financial position is balanced: if an operation impacts one side, it will immediately impact the other.

Example: a membership of $100.00 increases the organization’s bottom line by $100.00 and therefore the liabilities. It also increases the assets, since the amount in the bank increases in parallel by $100.00

Budgets & Budget Items

A budget and its associated budgetary items make it possible to monitor the profitability of a project or an activity.

Unlike bookkeeping, this "analytical follow-up" is not mandatory. It is a tool that allows you to have the necessary information to make decisions (e.x.: stop a project that is losing too much money).

See the article create budgets and breakdown entries.

Accounts

You can think of this as the accounting accounts that you customize on your software, and that appear on your accounting entry page. You can find this in Accounting > Settings.

See article: Add/remove accounting categories

Accounting closing

The accounting closing ends the accounting period. It’s the end of the period and the beginning of the next one.

It allows you to:

• Freeze the accounting year
• Lay the foundations for the next fiscal year by generating new entries
• Generate financial statements, including the income statement and the balance sheet

On Springly, the software generates the entries which are specific to the accounting closing. In order to prepare for accounting closing, a list of checks is performed and shared with you.

Accrual accounting

Accrual accounting distinguishes the commitment (debt or receivable) from its payment.

As a reminder, there is a "debt" when your organization owes something to a third party (for example insurance payment). A "receivable" is the opposite of a debt: the organization must receive money from a third party.

See the article choose your accounting level.

Cash accounting

This is roughly equivalent to the accounts you do for yourself from your bank statement. You deduct expenses from revenues to obtain a result.

• Main advantage: it is simple.
• Main disadvantage: it is difficult to know if someone owes you money or, on the contrary, if you have a debt, and you cannot generate a balance sheet, which is often requested in funding applications.

Petty Cash account

This is the accounting equivalent of your physical cash box, which contains cash. The cash account is affected by cash withdrawals and deposits at the bank, and payments (purchases and sales) in cash.

Warning: a cash account cannot have a strictly negative balance.

See Best practices for managing petty cash.

Profit and loss

It summarizes the expenses and the income.

It allows you to know whether the organization generates profits or losses during the accounting period.

Receivable

A "receivable" exists when the association must receive money from a third party.

You can find your receivables from Accounting > Book entry, then "Manage your debts/receivables”.

Please note that the management of debts and receivables is only possible with accrual accounting, to be chosen from Settings > Accounting.

Debt

A "debt" exists when the organization owes money to a third party.

You can find your debts from Accounting > Entry, then "Manage your Payables & receivables".

Please note that the management of debts and receivables is only possible with commitment accounting, to be chosen from Settings > Accounting.

Fiscal year (or accounting period)

The period during which you record your accounting events, and which allows you to establish your organization's accounts, generate the balance sheet, etc.

It is usually one year.

FEC / File of Accounting Entries

This computer document gathers all the accounting entries of a structure in a defined form.

The FEC gathers all the accounting entries of a fiscal year in a precise format. It is required by the tax authorities in case of an audit.

General Ledger

The general ledger contains all the accounting entries, sorted by account and then by date. It is a more "ordered" level of the journal (see below). We can also recreate it from General Ledger. The entries are sorted by account and then by date.

This is useful if you want to know the details of the entries for a particular account.

Journal/Journals

The journal lists all the accounting operations sorted by date. This document is intended for accountants or chartered accountants.

See the complete article on accounting documents

Bank reconciliation

The bank reconciliation consists of comparing the actual cash position in your bank account with the accounting position in your bank account.

See the article Understanding the Bank reconciliation.

Check remittance

When you receive a check for payment, depositing it at the bank is not enough. You must also record this transaction in your accounting: this is what we call check remittance on Springly. 

This allows you to have a faithful accounting of your organization's bank account. The software generates the right accounting entries for you.

To do this, go to Accounting > Book Entry, then "Book a new revenue".

Breakdown/Breakdown of entries

The breakdown consists of attributing an income or an expense to a budget. This allows you, for example, to know if a project/activity is generating money or losing money.