Accounting for a charitable entity differs from commercial bookkeeping because receipts are often restricted. Corpus donations, earmarked grants, and general voluntary contributions cannot be mixed if the instrument or the donor letter imposes a condition. Application of income, accumulation, and capital expenditure have to be identifiable from the ledgers, not only from a year-end worksheet.
Books typically include a donation register with mode of receipt and donor identification where required, a grants register, separate ledgers for each restricted fund, and an application-of-income working that maps expenses to objects. Bank reconciliation is performed against every account, including savings accounts opened for a specific project.
Payments to trustees, related parties, and entities covered by the Income-tax Act’s restrictions on charitable institutions are flagged when they are booked, so that they do not surface for the first time in the audit or in the 12AB statement of particulars.
Month-end closes produce a receipts-and-payments statement and a simple activity summary that trustees can read before the annual financial statements are drawn up.