Understanding Account Types in GoodBooks

Overview

GoodBooks uses a chart of accounts to organize every financial transaction your organization records. Every account belongs to a type, and every type belongs to one of five top-level categories. This structure is the foundation of nonprofit fund accounting — the "many buckets" that let you track where money came from and where it went.

You don't need to be an accountant to use GoodBooks. This article explains what each account type means in plain language so you can confidently set up your books.

The Five Account Categories

#	Category	Normal Balance	Type
1	Asset	Debit	Real
2	Liability	Credit	Real
3	Net Asset	Credit	Real
4	Revenue	Credit	Nominal
5	Expense	Debit	Nominal

Real accounts appear on your Balance Sheet and carry their balances forward year to year. Nominal accounts appear on your Statement of Activities (income statement) and reset to zero at the start of each fiscal year.

Asset Accounts

Assets are things your organization owns or is owed. The balance in an asset account increases with a debit and decreases with a credit.

Account	Description
Petty Cash	Physical cash on hand for small expenses
Bank Account	Checking or savings accounts at your financial institution
Receivables	Money owed to your organization (pledges, grants not yet received)
Fixed Assets	Equipment, furniture, or property your organization owns
Noncurrent Investments	Long-term investments held by the organization

Liability Accounts

Liabilities are things your organization owes to others. The balance increases with a credit and decreases with a debit.

Account	Description
Payables	Bills your organization owes but hasn't paid yet
Credit Card	Outstanding balances on organization credit cards
Payroll Liabilities	Taxes and withholdings owed from payroll
Deferred Revenues	Funds received for future periods (e.g., dues paid in advance)
Current Long-Term Liabilities	The portion of long-term debt due within the current year
Noncurrent Liabilities	Debt or obligations due beyond one year

Net Asset Accounts

Net assets represent the organization's accumulated financial position — essentially, assets minus liabilities. This category works differently from Revenue and Expense: it's a real account that persists year over year. GoodBooks manages net asset balances automatically as part of year-end closing.

Note for treasurers: You typically won't post directly to Net Asset accounts. They're updated by GoodBooks as part of normal accounting processes.

Revenue Accounts

Revenue accounts track money coming into your organization. These reset to zero each fiscal year. The balance increases with a credit.

Account	Description
Contributed	Donations, grants, and contributions from donors
Earned	Income from services, events, or program fees
Other	Revenue that doesn't fit another category
Release from Restriction	Restricted funds that have been spent for their intended purpose

About Release from Restriction: When a donor gives money for a specific purpose (like a building fund), it's initially restricted. Once you spend it on that purpose, you record a "Release from Restriction" to move it from restricted to unrestricted net assets. GoodBooks helps manage this automatically through fund accounting.

Expense Accounts

Expense accounts track money going out of your organization. These also reset to zero each fiscal year. The balance increases with a debit.

Account	Description
Personnel	Wages, salaries, and contractor payments
Occupancy	Rent, utilities, and facility costs
Program Expenses	Costs directly related to carrying out your mission
Administrative	General overhead — office supplies, banking fees, etc.
Fundraising	Costs to raise money — events, mailings, appeals
Technology	Software subscriptions, website, hardware
Depreciation	The allocated cost of fixed assets over time
Insurance	Liability, property, and other insurance premiums
Transportation	Mileage, vehicle costs, and travel
Other	Expenses that don't fit another category

Frequently Asked Questions

Can I add my own accounts?
Yes. You can create additional accounts under any parent category. GoodBooks will assign the next available code in that range. Custom accounts follow the same debit/credit rules as the built-in types.

What's the difference between Contributed and Earned revenue?
Contributed revenue is money given without expectation of something in return — donations, grants, and sponsorships. Earned revenue is money received in exchange for goods or services — ticket sales, membership fees, or program tuition.

Why does Release from Restriction show as revenue?
This is a standard nonprofit accounting convention. When restricted funds are released, they're recognized as revenue in the current period to match the period in which the related expenses occurred. Your auditor or CPA can explain further if needed.

What's a "nominal" account vs. a "real" account?
Real accounts (Assets, Liabilities, Net Assets) carry their balance forward year over year — like a running total. Nominal accounts (Revenue, Expenses) are temporary; they accumulate during the fiscal year and then close out to Net Assets at year-end. GoodBooks handles this closing process automatically.

Setting Up Your Chart of Accounts
Understanding Fund Accounting: Not One Pool, Many Buckets
Recording a Disbursement
Understanding the Check Register
Year-End Closing in GoodBooks