Genesis 1 describes the creation of the world in one short chapter.  It starts with the basic elements — water, light, darkness, and sky — before getting more complicated with plants, creatures, and finally human beings.

In a similar fashion, here are the elements of bookkeeping, presented in less than a page.

You don’t have to know everything to understand church finance.  But you do have to have a grasp of the basics, as well a sense of the big picture, so that you can put the pieces together coherently.

In order to make financial decisions, churches need to categorize money received and money disbursed, as well as keeping track of how much money they have and how much they owe to others.

There are four primary bookkeeping terms that form the basis of accounting:

An asset is a thing of value that you own: a checking account, a Certificate of Deposit, 10 shares of stock, $50 on deposit at the post office for postage due items.  Buildings, land, and equipment are called fixed assets.

A liability is anything you owe to others, outside of your organization: the balance due on a bank loan, payroll tax withheld from paychecks, a telephone bill that hasn’t been paid yet.

Income is money you receive: contributions, program fees, event income, investment income, grant income.

An expenditure is money you give or spend: office supplies, candles, or a donation to a community outreach organization or your denomination

How would you classify these items?  (asset, liability, income or expense?)

1. Checking account

3. Balance due on a loan used to put in an elevator

4. Money put in the offering plate

5. Credit card balance

6. 10 shares of stock

7. Monthly mortgage payment

8. Petty Cash in an envelope to be used for postage, office supplies, etc.

9. Money given to the church for the Youth Group Trip

10. Money to start cash box at Church fair

11. Payment for copier repair

12. Payment for electric bill

13. Interest earned on CD

14. Pastor’s paycheck