Subject: Seeking Clarity on Budgeting Terminology
Hello everyone,
Though I’m not an accountant, I’m currently navigating some financial tasks at my nonprofit organization, where I serve as the Executive Director. As a small organization with only a part-time fundraiser, I’ve found myself stepping into unfamiliar territory. We recently lost a board member who managed our Accounting, and unfortunately, they left without providing any of the necessary files. Now I’m faced with the challenge of hiring someone to untangle that situation, but that’s not the main focus of my post.
I’m in the process of creating a budget and comparing the budgeted expenses and income to what we’ve actually spent. I wanted to clarify something: in Accounting, is it correct to express a positive variance as a negative number? For instance, if I budgeted $16,000 in expenses but only spent $6,000, would it be better to say I’m “up” by $10,000, or should I denote it as -$10,000?
For your information, I’m working on this in Excel. I do have QuickBooks Online but haven’t utilized it much yet since I’m still in the process of securing an accountant. Can QuickBooks help with this type of financial analysis?
I appreciate your insights!
Thank you!
One response
It sounds like you’re navigating quite a bit without much support, so kudos to you for tackling these challenges! When it comes to budgeting and variances, the terminology can be a bit confusing.
In your example, if you budgeted $16K in expenses and only spent $6K, you would show a positive variance of $10K, meaning you under-spent compared to your budget. In Accounting terms, this would look like “Budgeted Expenses – Actual Expenses = Variance,” so you would write it as a positive $10K.
In Excel, you can keep track of this by setting up a simple budget vs. actual format with columns for your budgeted amounts, actual amounts, and variance.
Regarding QuickBooks, it can definitely help with budgeting and tracking these variances in an easier way once you get familiar with it. You can set up budgets in QuickBooks and it will generate reports to show you how your actual income and expenses compare to your budgeted amounts, automatically calculating the variances.
I recommend getting some training on QuickBooks once you have your accountant sorted out; it can save you a lot of time and make things much easier in the long run. Good luck with your budgeting! If you have more questions, feel free to ask!