Understanding the Accounting Concepts Used in Springly

This article provides simple definitions for the accounting terms you'll encounter in Springly, listed in alphabetical order.

• C : carried forward (C/FWD)
• T : trial balance, opening balance, statement of financial position, funds & budget items
• A : accounts, accounting period closing, accrual accounting, cash-basis accounting, auxiliary account, petty cash account, profit and loss, third-party account, receivable
• L : liability
• A : accounting period
• A : audit file (FEC)
• G : general ledger
• F : fixed assets
• J : journal
• M : matching
• B : bank reconciliation, deposit slip
• A : allocation management
• A : allocate/allocation

We'll keep updating this article based on your suggestions and questions.

Carried Forward (C/FWD)

Carried forward entries are the book entries that bridge the accounting period you just closed and the one now opening. They ensure continuity from one period to the next, keeping your books accurate.

Think of it like your bank statement: if you have $500 in your account on December 31, that same $500 carries over to January 1.

Any account with a non-zero balance is carried forward into the new accounting period — except class 6 (expense) and class 7 (revenue) accounts, which are tied to the period's net result.

Carried forward entries are generated automatically by the software when you close the accounting period.

Direct Allocation

This term relates to allocation management — the process of assigning a revenue or expense entry to a fund.

When you enable direct allocation, you'll be prompted to allocate the entry right after creating an expense or revenue book entry. You can also choose to do it later.

Depreciation

A fixed asset is subject to depreciation, which records its loss in value at the end of the accounting period. That loss in value may result from use, wear and tear, obsolescence, or the passage of time.

This value is spread over the asset's useful life, which must be determined upfront. It reflects the estimated actual period of use at the time the asset is recorded.

Depreciation takes the form of a series of entries spread across multiple accounting periods, distributing the cost of the asset over its useful life. The organization's net result is reduced each year by the amount of that depreciation.

For example, if you purchase a computer with an estimated useful life of 5 years, the initial value (typically its purchase cost) will be reduced by 1/5 each year.

See the article Recording Fixed Assets and Depreciation

Trial Balance

This is one of the financial reports available in Springly.

A trial balance gives a summary view of all money in and out of your nonprofit over an accounting period. It lets you quickly check whether your accounts are balanced.

See the full article on accounting documents

Opening Balance

This is the state of your books when you first start using Springly. Enter the balances for all of your nonprofit's accounts — everything that follows will be built on this foundation.

The opening balance can be set up under Settings > Accounting, in the "General Settings" section.

Statement of Financial Position

The statement of financial position is a core accounting document. It's a snapshot of your nonprofit's assets and resources at a specific point in time, showing the organization's financial health based on its assets and liabilities.

Simply put:

• Assets represent what the nonprofit owns — what generates positive value
• Liabilities represent the nonprofit's obligations to third parties — a negative economic value for the organization

A statement of financial position is always in balance: any transaction that affects one side immediately affects the other.

Example: a $100 membership (= Revenue) increases the nonprofit's net result by $100, which increases liabilities. It also increases assets, since the bank balance rises by $100 at the same time.

See the full article on accounting documents

Funds & Budget Items

A fund and its associated budget items let you track the financial performance of a project or activity.

Unlike standard bookkeeping, allocation management is optional. It's a tool that gives you the information you need to make informed decisions — for example, deciding to wind down a project that's consistently running at a loss.

See the article Using Allocation Management and Funds

Accounts

These are the accounting accounts you customize in Springly, which appear on your book entry page. You'll find them under Accounting > Settings.

See article: Adding / Removing Accounting Accounts

Accounting Period Closing

As the name suggests, closing an accounting period marks the end of one period and the beginning of the next.

It allows you to:

• Lock the period so no further changes can be made,
• Set the foundation for the next period by generating carried forward entries,
• Generate financial statements, including the profit and loss and the statement of financial position.

In Springly, the closing process is streamlined — the software automatically generates the required entries. That said, some preparation is needed beforehand, and a checklist is provided to guide you through it.

Accrual Accounting

Accrual accounting separates the accrual (liability or receivable) from the actual payment.

A liability arises when your nonprofit owes something to a third party (for example, an insurance payment). A receivable is the opposite: money the nonprofit is owed by a third party.

See the article Choosing Your Accounting Method: Accrual or Cash-Basis

Cash-Basis Accounting

This is essentially the equivalent of tracking your own finances from a bank statement. You subtract expenditures from revenues to get a net result.

• Main advantage: its simplicity
• Main drawback: it's hard to know who owes you money or whether you have outstanding liabilities — and you can't generate a statement of financial position, which is often required for grant applications.

Check with your state's nonprofit regulations or a local advisor to determine whether cash-basis accounting is appropriate for your organization.

Auxiliary Account

To simplify accounting tracking, all money in and out is organized across different accounts. Among these are auxiliary accounts, which record transactions related to vendors (account 401) and customers (account 411).

The account payable, or account 401, records all book entries related to unpaid vendor invoices — in other words, the amounts your nonprofit still owes to vendors.

The account receivable, or account 411, records outstanding receivables — all payments your nonprofit is still owed by its customers.

See the article Enabling and Using Auxiliary Accounting and Third-Party Accounts

Petty Cash Account

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

Note: a petty cash account cannot carry a negative balance.

See Best Practices for Petty Cash Management

Profit and Loss

It summarizes Expenses (class 6 accounts) and Revenue (class 7 accounts).

It shows whether the nonprofit generated a surplus or a deficit during the accounting period.

See the full article on accounting documents

Third-Party Account

A third-party account is a class 4 account (based on the standard chart of accounts).

Third-party accounts can be divided into 7 categories, depending on the type of third party involved. The auxiliary accounts for Vendors (401) and Customers (411) both fall under this category.

See the article Enabling and Using Auxiliary Accounting and Third-Party Accounts

Receivable

A receivable exists when the nonprofit is owed money by a third party.

You can view your receivables under Accounting > Book Entry, then "Track your liabilities and receivables".

Note: managing liabilities and receivables is only available with accrual accounting, which you can enable under Settings > Accounting.

Liability

A liability exists when the nonprofit owes money to a third party.

You can view your liabilities under Accounting > Book Entry, then "Track your liabilities and receivables".

Note: managing liabilities and receivables is only available with accrual accounting, which you can enable under Settings > Accounting.

Accounting Period (or Fiscal Period)

The period during which you record your financial transactions, prepare your nonprofit's accounts, generate the statement of financial position, and so on.

It typically covers one year.

FEC / Accounting Audit File

This digital document compiles all book entries for an entity in a standardized format.

The FEC brings together all book entries for an accounting period in a defined format. It may be required by tax authorities in the event of an audit.

See the full article on the FEC accounting audit file

General Ledger

The general ledger contains all book entries, sorted by account and then by date. It's a more organized view than the journal (see below). It can be reconstructed from the general journal, with entries sorted by account and then by date.

This is useful when you want to see the full detail of entries for a specific account.

See the full article on accounting documents

Fixed Assets

In accounting terms, a fixed asset is an asset that will be used over a period longer than the current accounting period. A computer, for example, may be used for several years — making it a fixed asset that is accounted for across multiple successive accounting periods.

There are two main types of fixed assets:

• Tangible fixed assets, which are physical assets such as equipment, vehicles, or real estate.
• Intangible fixed assets, which are non-physical assets such as software, rights, licenses, or patents.

See the article Recording Fixed Assets and Depreciation

Journal

The journal is a comprehensive list of all accounting transactions, sorted by date. It is primarily intended for accountants or CPAs.

See the full article on accounting documents

Matching

Matching is an accounting operation that involves assigning a unique code (in the form of one or more letters) to two book entries: the accrual entry and the payment entry. One entry appears on the credit side, and the other on the debit side.

This code makes it possible to reconcile amounts in a third-party account (class 4 accounts). Matching is typically applied to accounts receivable and accounts payable.

Once matching is complete, you can see:

• Invoices still to be paid;
• Invoices pending collection.

See the full article on matching in Springly

Bank Reconciliation

Bank reconciliation involves comparing the actual balance in your bank account with the accounting balance in your bank account record (account 512).

See the article Understanding Bank Reconciliation

Deposit Slip

When you receive a check as payment, depositing it at the bank isn't enough. You also need to record the transaction in your books — that's what the deposit slip feature in Springly is for.

This keeps your books in sync with your nonprofit's actual bank account. The software automatically generates the correct book entries for you.

To do this, go to Accounting > Book Entry, then "Deposit Slip".

Allocation Management

Allocation management provides a detailed view of your finances broken down by fund, project, or budget item — as opposed to general accounting, which gives an overall view of the organization's accounts.

By creating specific funds, you can easily see how expenses (class 6 entries) and revenues (class 7) are distributed across each budget item. This produces an allocated net result (surplus or deficit) for each item.

See the article Using Allocation Management and Funds

Allocation / Allocating Entries

Allocation means assigning a revenue or expense entry to a fund. This lets you see, for example, whether a project or activity is generating a surplus or running at a deficit.

See the article Using Allocation Management and Funds

👉 Download our accounting user guide for Springly (9 pages)