A chart of accounts is a tool that categorizes financial transactions. Account types include income, expenses, liabilities, equity, and assets.

For example:

  • By default, Buildium's chart of accounts includes such accounts as accounts payable, application fee income, and owner draw.

  • I added "Pet Deposit Liability" to my chart of accounts, and it was so easy!

Every financial transaction that you record in Buildium will be coded to one or more accounts. By choosing an account, you'll tell the software what the transaction is for and how it should be used in reports.

Account typeExamples

Assets

Assets are things a property owns

  • Bank accounts
  • Accounts Receivable
  • Property and equipment
  • Prepaid expenses
  • Accumulated Depreciation

Liabilities

Liabilities are amounts a property owes

  • Loans
  • Security Deposits
  • Prepaid amounts
  • Pet Deposits
  • Credit Cards

Equity

Equity is amounts that belong to a property's owner after subtracting what's owed to other people

  • Owner contribution
  • Owner draws

Income

Income is amounts that a property earns

  • Rent
  • Association Fees
  • Utility Income
  • Laundry Income
  • Late Fees

Expenses

Expenses are amounts that a property spends

  • Management Fees
  • Repairs
  • Supplies
  • Insurance
  • Advertising

 

A contra account is an account on your chart of accounts that usually has a negative balance on reports.

For example:

  • Owner draw equity is a contra equity account. When you look at it on a balance sheet, you'll see a negative number because the owner has taken equity out of the property.
  • Some accountants show sales discounts as a contra income (or contra revenue) account to they can track how much income they "lost" through the promotion.

    Let's say a widget sells for $100 and it's on sale for $80. You sell one widget for that discounted price. Most accountants will show $80 of "widget sales" on a cash basis income statement.

    Widget sales income $80
    Total income $80

    Some accountants will want to track the cost of the promotion. Their income statement looks like this.

    Widget sales income $100
    Promotions (contra income) ($20)
    Total income $80

    Both methods are correct. If you're not sure which to use, check with your accountant.

Add a contra account to your chart of accounts like any other account. For example, add a contra revenue account as an income account. As you use Buildium, your transactions will cause the number to appear with negative totals on your reports.

Buildium's budget feature can support negative numbers in budgeted amounts. When the actual amounts are calculated, they'll appear as negative numbers on the report.

 

 

Article #: 112208

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