Day Care Center - Chart of Accounts

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Day Care Center
Day Care Centers is a service available to children who are away from their own homes for a part of the day. Generally parents seek substitute care for reasons of employment. The life of day has become extensively busy, so in this busy life people are left with very little time to give to their children. Need for day care centers increase as more and more mothers of pre-school age children are forced to find jobs outside the home, which means mothers who might ordinarily stay at home and care for their own children must seek income to help make ends meet. The main purpose of day care centers is to provide facility to those parents who are very busy in there professional life and they can not take of there children’s. So what they do is that they go to those day care centers and leave their children’s there, and themselves go to their work and when they get free from their work, they pick their children’s and go home. A day care center is an institution where people leave their children’s there. And these day care centers look after those children’s. They provide those children’s with every facility they require, they give them toy’s to play with, they feed them, they even give them activities like building blocks, working with alphabets, teaching them basic languages(depending on the age).

Requirements of a Day Care Center

A day care center is one of earliest institution for children’s and plays a very important role in children’s mental, physical development and determining his future. So in order to manage a day care center, there are certain requirements set by Government of very country which need to be met before it is allowed to operate. Some of basic requirements of day care centers are as following:

1. License from the government is needed. 2. A proper and secure building is required. 3. Qualified staff with proper training. 4. In order to entertain children enough toys should be available. 5. Play grounds for healthy activities. 6. Sports equipment. 7. Health requirements. 8. The center should maintain all areas of facilities in clean, safe condition free

hazards to the health and safety of the children.
9. Center shall ensure that all structures, fences, equipment and grounds are

maintained.
10. A Center shall ensure that each child, except school-age children who do not sleep

at the Center, has clean, age-appropriate individual rest equipment such as a crib, playpen, cot, bed or mat and bedding.

Maintaining Accounts

Charts of accounts
“A Chart of accounts is a list of all accounts tracked by a single accounting system, and should be designed to capture financial information to make good financial decisions.” Each account in the chart is assigned a unique identifier, typically an account number. Each account in the Anglo-Saxon chart is classified into one of these five categories: 1) Assets 2) Liabilities 3) Equity 4) Income 5) Expenses.

Account Order
Account categories are presented in a standard order, beginning with the accounts presented in the Statement of Position (Balance Sheet.) These are:
Assets Assets are the tangible items an organization has as resources, including cash, accounts receivable, equipment and property. Assets are usually listed in descending order of liquidity. This means that cash and other assets which are easily converted to cash are listed first, and fixed assets such as property and equipment are listed last. Asset accounts usually start with the number "1." Liabilities Liabilities are obligations due to creditors, such as loans and accounts payable. Current liabilities, those obligations which fall due within the next year, are usually listed first, followed by long-term liabilities. Accounts payable and payroll taxes payable are usually listed before other payables. Deferred revenue and other liabilities are often further down on the list. Liabilities often begin with the number "2." Net Assets (or Fund Balances) Net assets, formerly referred to as the fund balance(s), reflect the financial worth of the organization. They represent the balance remaining after obligations are subtracted from an organization’s assets. Organizations which only receive unrestricted gifts will have only one net asset account. Those with temporarily or permanently restricted net assets, such as endowments will have more than one net asset account. Net asset accounts begin with the number "3." Income and Expense These accounts follow the Statement of Position Accounts.

Note that the chart of accounts lists the accounts that are available for recording transactions. In keeping with the double-entry system of accounting, a minimum of two accounts is needed for every transaction--at least one account is debited and at least one account is credited. Though this is not needed when you are using some accounting software as they do the 2nd step automatically by themselves.

Day Care Center – Chart of Accounts
Most of Day care centers working in Pakistan non-profit type of organizations. There do exists a good number of day care centers which are run for profit purpose but since most of them are of non-profit type so the chart of accounts we are presenting here is of non-profit day care center. Chart of accounts for a non-profit organization is quite different from profit based organizations. Chart of Accounts of non-profits are also called UCOA (Unified chart of accounts). These were prepared by CAN and NCCS. In below is given a sample chart of accounts for a small non-profit day care center. Balance amounts are not given since they are usually kept confidential. Title of different accounts along with their class type and identifying number are given as they appear in chart of accounts.

Number

1010 1040 1110 1131 1240 1241 1245 1299 1450 1610 1620 1640 1650 1725 1745 1755 2010 2021 2050 2150 3000 3001 3100 3200 4130 4150 4230 4530

Account Title Cash in Bank - operating Petty cash Accounts Receivable Tuition Receivable Grants Receivable – Government Grants Receivable – Miscellaneous Discounts- Long term Grants Un deposited Funds Prepaid Expenses Land Building Furniture Transportation Vehicles Acc. Depreciation – Land Acc. Depreciation – Building Acc. Depreciation - Vehicles Accounts Payable Salaries Payable Credit Card Accrued Expenses – other Un restricted net assets Opening Bal Equity Temporarily restrict net assets Permanently restrict net assets Gifts Donated use of facilities Trust Grants Business \ Industries Grants

Type Assets-Bank Assets-Bank Assets-A\R Assets-A\R Assets-A\R Assets-A\R Assets-A\R Other current Assets Other current Assets Fixed Assets Fixed Assets Fixed Assets Fixed Assets Fixed Assets Fixed Assets Fixed Assets Liabilities – A\P Liabilities – A\P Liabilities – other Liabilities – other Equity Equity Equity Equity Income Income Income Income

Balance ($)

4540 5210 5490 5800 7040 7060 7210 7220 7240 7510 7530 8110 8130 8190 8220 8230 8260 8400 8570 8590 8591 8650 9830

Local Government Grants Membership dues - individuals Miscellaneous Revenue Special events - functions Awards for members and donors Benefits paid to or for members Salaries – management Salaries - Teachers, Baby sitters Employee benefit plans Fund raising expenses Legal fees Supplies Communications – Telephone, Postage, Internet e.g. Publications and Printing expenses Utilities Real state Taxes Maintenance Depreciation Expense Advertising Expense Other Expenses Bank services charges Other Taxes Capital purchases – Equipment

Income Income Income Income Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Expense Other Expense

NOTES

There may be number of titles\terms you might have come across for the first time while observing chart of accounts (chart of accounts for non-profits to be specific). In below we have done an effort to make you understand those new terms by giving little descriptions of them and how they work in accounting system. UCOA, CAN and NCCS UCOA© is the Unified Chart of Accounts for nonprofit organizations that was developed by the California Association of Nonprofits (CAN) and the National Center for Charitable Statistics (NCCS). This standardized chart of accounts was designed so that nonprofits can quickly and reliably translate financial statements into the categories required by IRS Form 990, the Federal Office of Management and Budget, and other standard reporting formats. UCOA also seeks to promote uniform accounting practices throughout the nonprofit sector. UCOA was developed by a consortium of various nonprofit organizations.

PETTY Cash
Physical cash retained by an entity in order to pay for small items of goods and services.

Unrestricted NET ASSETS The part of net assets of a not-for-profit organization that is neither permanently restricted nor temporarily restricted by donor-imposed stipulations. Unrestricted support, Revenues or gains from contributions that are not restricted by donors. See also restricted support.

Donor-imposed Restriction
A donor stipulation that specifies a use for the contributed asset that is more specific than broad limits resulting from the nature of the organization, the environment in which it operates, and the purposes specified in its articles of incorporation or bylaws, or comparable documents for an unincorporated association. A restriction on an organization's use of the asset contributed may be temporary or permanent.

Restricted NET ASSETS
Resources whose use is restricted by donors as contrasted with those over which the organization has complete control and discretion. Restricted net assets may be permanently or temporarily restricted.

PERMANENT Restriction
A donor-imposed restriction which stipulates that resources be maintained permanently but permits the organization to use up or expend part or all of the income (or other economic benefits) derived from the donated assets.

PERMANENTLY restricted net ASSETS
The part of the net assets of a not-for-profit organization resulting from (a) contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization, (b) other asset enhancements and diminishments subject to the same kinds of stipulations, and (c) reclassifications from (or to) other classes of net assets as a consequence of donor-imposed stipulations.

TEMPORARY Restriction
A donor-imposed restriction that permits the donor organization to use up or expend the donated assets as specified and is satisfied either by the passage of time or by actions of the organization.

TEMPORARILY restricted net ASSETS
The part of the net assets of a not-for-profit organization resulting from (a) contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that either expire by the passage of time or can be fulfilled and removed by actions of the organization pursuant to those stipulations, (b) other asset enhancements and diminishments subject to the same kinds of stipulations, and (c) reclassifications to (or from) other classes of net assets as a consequence of donor-imposed stipulations, their expiration by passage of time, or their fulfillment and removal by actions of the organization pursuant to those stipulations.

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