Accounting FAQs

A curated list of Q&As collected and organized by topic.

For more information, please also review:

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Association or Library?

Q: Can I have my association and library funds in the same bank account?

A: Best practice is no, they should not be co-mingled.

Marta Klakov, Welch, February 2026

 

Q: I’ve used my car for the  library (picking up books, stamps, equipment, furniture) but also for member expenses (snacks, coffee, lunches for CPD events). Is it a library or association expense?

A: Mileage incurred for library services would come from the LiRN grant, otherwise it’s an association expense. You will have to do two separate payments (as grant funds and association funds should not be in the same account). Note that LiRN uses the mileage rate published by the LSO (which is usually lower than Revenue Canada.) Email [email protected] for the current rate.

Theresa Leitch, November 2025

Budget Changes, EFBs, Small Surplus

Q: Can I carry-over funds from one year to the next? For example, LexisNexis was late in invoicing me at the end of 2025, so the funds I had to pay them will be unused for 2025. And there wasn’t enough time to apply those funds to another vendor. Can I carry them over into 2026?

A: If the amount in your fund balance is less than 10% of your current annual grant amount, there’s no excess fund balance and it is automatically carried over. The general guideline for spending is that grant funds should generally be spent in these budget categories as proposed in the budget (i.e. salary, collections, etc). However, LiRN recognizes that flexibility is required to operate libraries efficiently and effectively. Associations may re-allocate the higher of 10% or $1,000 from any one budget category to another. Re-allocations greater than this should be discussed with LiRN in advance. If it is simply a matter of spending on the collection but acquiring from a different vendor than anticipated, that’s completely fine – no need to discuss in advance.

Theresa Leitch, February 2026

 

Q: Am I allowed to shift $2000 on my budget from one line to another? The reason is that the cost of my loose-leaf’s have increased substantially, whereas my text costs are not increasing at the same rate. Can I shift $2000 from account 5100 to 5140?

A: Yes, as they are in the same “bucket” money can be shifted from one line to the other without prior approval and as needed.

Theresa Leitch, February 2026

Q: I’m unclear on what happens when an association runs a small (i.e., not-EFB-level) surplus. Can I just spend my (minimal) remaining 2025 funds in 2026?

A: You may carry over grant money if the library fund balance is less than 10% of the current year’s grant, and any carried-over funds can be used for library operations. Grant funds should generally be spent as budgeted, but you may re-allocate up to the higher of 10% or $1,000 from one category to another; larger changes should be discussed with LiRN first. Likewise, if using the fund balance causes spending in any category to exceed the higher of 10% or $1,000 above its budgeted amount, consult LiRN in advance.

Theresa Leitch, February 2026

Capital Assets

Q: In 2018 we replaced some old wooden shelving with metal shelving; on line 1730 “Office Furniture and Equipment” I entered the cost of the shelving  – it was $6,772.09. Since 2018 this amount has carried forward to every balance sheet and appears under “capital assets”, which obviously impacts our total balance even though it’s money we spent in 2018. So my question is: how do I clear this out and make it stop effecting every single balance/trial balance sheet I make?

A: Capital assets should be amortized each year, so it sounds like this might not have been done. By posting amortization, the cost of furniture and equipment is being “moved over” from the Balance Sheet to the Profit & Loss Statement, and eventually the Balance Sheet amount is drawn down to $0. Each capital asset purchase should have an amortization/depreciation schedule.

Marta Klakov, Welch, December 2023

 

Cash vs Accrual Accounting

Q: What is the difference between cash and accrual accounting?

A: The key difference between the two approaches is timing:

  • Cash basis accounting focuses on cash flow, only recording transactions when money changes hands
  • The accrual method accounts for earnings the moment they are owed to you and expenses the moment you owe them
  • The accrual basis accounting makes use of accounts receivable, accounts payable and accrued liabilities
  • Accrual accounting provides a more comprehensive financial view and is GAAP compliant and is recommended for libraries
  • GAAP = Generally Accepted Accounting Principles

Marta Klakov, Welch, February 2026

 

Financial Reporting

Q: We are having an audit done – should I wait to submit my financial reports until that is completed?

A: Please still submit your financial reports for the quarter by the deadline date.

Theresa Leitch, February 2026

 

Posting Transactions

Q: Is it right to do all day-to-day bookkeeping through Payables and Receivables rather than the General Journal?

A: Yes, day-to-day bookkeeping—specifically tracking money owed to vendors and money owed by customers—should be done through Accounts Payable (AP) and Accounts Receivable (AR) modules, not through the general journal. Using AP/AR modules provides better tracking of specific, unpaid transactions. If you use general journals for daily sales or purchases, you lose the ability to track individual invoice details, payment terms, and vendor/customer histories. In programs like QuickBooks, using journal entries incorrectly can cause issues with reporting and, for example, incorrectly record a cash-basis transaction. General journal entries are better reserved for non-routine transactions like depreciation, adjusting entries, or accruals.

Marta Klakov, Welch, February 2026

 

Q: I was taught to do purchase and payment on the same day – I believe this is causing issues when I have to modify or delete a payment.  It credits a credit note in Sage.  How do I adjust that credit note so the trial balance is correct in terms of money in the bank?

A: Accounts Payable should be posted as soon as bill is received even if the payment will be made at a later date. You should not hold on to the bill and wait with posting it until you are ready to pay it. As mentioned before, posting bills to AP as soon as they are received, tracks what you owe (liabilities) and helps to manage outflows. If for any reasons you need to adjust or change the payment, AP will not be affected, only payment, so there should be no issues with credit notes and/or incorrect balances.

Marta Klakov, Welch, February 2026

 

Q: Going forward I will not do the payment side until I have received the bank statement with proof it has cleared the account.  Is that correct?

A: No, you should record the payment as soon as it is made. Posting payments as soon as they are made is critical for maintaining accurate financial records, and ensuring steady cash flow. Immediate posting ensures your financial records are up to date. Promptly recording payments means you know exactly how much cash is available, helping you avoid last-minute scrambles for funds. You should do your bank reconciliations at least monthly and if the payment you issued, doesn’t clear the bank, the item will show as outstanding and you will be able to investigate it and re-issue payment if needed.

Marta Klakov, Welch, February 2026

 

Q: For Associations where the library account is reimbursed by the association account for payroll, what is the cleanest way to record this?

A: Record them as separate transactions. Record payroll in the library books as a normal payroll expense. Record the reimbursement as a separate transaction, using a payroll reimbursement or expense recovery account. Keeping transactions separate maintains transparency and shows true payroll costs.

Mofy Lyon, LiRN Board member and CPA, February 2026

 

Software and Bookkeeping

Q: Who does your books?

A: From the February 2026 Survey:

  • Most bookkeeping is performed by library or association staff.
  • About one-third use an external accountant or bookkeeper.
  • LIRN conducted a survey of what is used across the network in Feb. 2026.

 

Q: What accounting software should I use?

A: From the February 2026 Accounting Best Practices Session:

  • Sage is the most widely used, especially among local libraries.
  • QuickBooks / QuickBooks Online is used more evenly by regionals.
  • LiRN Accountants recommend QuickBooks if you are considering make a change.
  • No network-wide change is planned; instead, LiRN will explore an opt-in QuickBooks Online licensing model, pending privacy assurances and feasibility.

T4 Information

Q: I am working on T4s have a question about how to fill out box 45 “Employer-offered dental benefits”. While our staff have access to benefits through LiRN, including dental, we are employed by the association which does not directly provide benefits. Which T4 Option should I choose?

A: For employees being offered the LiRN benefits package, their T4 should reflect option #3 (Payee, spouse, and dependent children) as the association is listed as an affiliate under the LiRN policy, and dental benefits are available to those members. Option 3 applies to all members that are on the LiRN plan, regardless of whether they have family coverage or not, as it reflects the coverage level provided by LiRN, which includes benefits for employees, their spouse, and dependent children.

Carole Lanthier, Canada Life/AJG February 2026

Year End Reporting

Q: I am preparing my fourth quarter financial reports, but they could change as our association is still doing an audit. Would you rather we wait until that is done, even if we miss the deadline to submit our reports to LiRN?

A: No, please still submit your Q4 reports to LiRN by the deadline date. In the spreadsheets (not in the email that goes to admin), not that they are subject to changes from the audit, and the date by which you might expect to submit updated reports should they change. And, if they do change, submit them as an “audited/annual report” for the year and we’ll submit them to the accountants for review along with your quarterly reports. Otherwise, an annual report is not required.

Theresa Leitch, February 2026

 

Q: Can you input Jan 2026 if you haven’t closed off Dec 2025?

A: Yes, you can start posting in January even though previous year is not closed off yet. You just need to be careful about the date you are choosing when posting so that nothing that doesn’t belong to the previous year is posted to that year (watch for auto-population of dates that put the new year in for you).

Marta Klakov, Welch, February 2026

 

Q: We have one QuickBooks account with 2 bank accounts. Should the Retained Earnings amount accumulate each year?

A: Yes, Retained Earnings accounts will accumulate each year.

Marta Klakov, Welch, February 2026