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CHAPTER 6. HUD CHART OF ACCOUNTS
6-1. INTRODUCTION
This chapter lists and defines the prescribed uniform system of accounts used by owners of all HUD-insured and HUD-held, cooperative projects. To assure that project accounting transactions are properly recorded and classified, project bookkeepers must familiarize themselves with the account definitions contained in this chapter. Cooperative projects must use the same accounts as rental projects, as well as the special asset and member equity accounts defined specifically for Cooperative projects. 6-2. ORGANIZATION OF THE CHART OF ACCOUNTS The HUD Chart of Accounts uses account categories prescribed by generally accepted accounting principles. A. The HUD Chart of Accounts is organized to provide complete and comprehensive project records. Since the project's annual financial statements are prepared on an accrual basis, HUD encourages owners/managing agents to keep project books and records on an accrual basis. Owners/managing agents are responsible for making any necessary year-end adjusting entries before the annual project audit using the accounts prescribed in the HUD Chart of Accounts. B. Additional accounts not included in the HUD Chart of Accounts should be established as needed, following generally accepted accounting principles and classified under the appropriate groupings in the HUD Chart of Accounts. C. An explanation of the Chart of Accounts appears in paragraph 6-4.
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6-3. CHART OF ACCOUNTS A. 1000 ASSET ACCOUNTS. 1100 CURRENT ASSETS: 1110 Petty Cash 1120 Cash in Bank 1130 Tenant/Member Accounts Receivable
(Coops) 1140 Accounts Receivable (Other) 1150 Notes Receivable 1160 Accrued Receivables 1170 Investments (Short Term) 1190 Miscellaneous Current Assets 1191 Commercial Security Deposits - Held in Trust 1200 PREPAID EXPENSES: 1210 Fuel Inventory 1220 Gasoline and Oil Inventory 1230 Supplies Inventory 1240 Prepaid Property & Liability Insurance 1250 Prepaid Mortgage Insurance 1260 Prepaid Advertising 1270 Prepaid Taxes 1290 MISCELLANEOUS PREPAID EXPENSES 1300 FUNDED RESERVES: 1310 Mortgagee Escrow Deposits 1320 Cash Replacement Reserve 1321 Securities, Replacement Reserve 1330 Cash Painting Reserve 1331 Securities Painting Reserve 1340 Cash Residual Receipts Reserve 1341 Securities Residual Receipts Reserve 1350 Cash General Reserves 1360 Securities General Reserves 1365 General Operating Reserve (Coops) 1370 Apartment Rehabilitation Deposits, (Coops)
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1380 Project Improvement Account 1400 FIXED ASSETS: 1410 Land 1420 Buildings 1430 Building Equipment (Fixed) 1440 Building Equipment (Portable) 1450 Furniture for Project/Member Use 1460 Furnishings 1470 Maintenance Equipment 1480 Motor Vehicles 1490 Miscellaneous Fixed Assets 1500 INVESTMENTS
3130 Owner Equity or Certificates Held in Treasury 3140 Certificates of Initial Capital Value Issued and Outstanding (Coops) 3200 EARNINGS 3210 Retained Earnings or Surplus or Deficiency from Operations (Coops) 3215 Amortized Mortgage (Coops) 3220 Replacement Reserve (Coops) 3230 Painting Reserve 3235 General Operating Reserve (Coops) 3241 Paid-in Surplus (Coops) 3250 Profit or Loss (Net Income or Loss) D. 4000 VALUATION ACCOUNTS 4100 ACCUMULATED DEPRECIATION 4120 Reserve for Depreciation - Building 4130 Reserve for Depreciation - Building Equipment - Fixed
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4140 Reserve for Depreciation - Building Equipment - Portable 4150 Reserve for Depreciation - Furniture for Project and Member Use 4160 Reserve for Depreciation - Furnishings 4170 Reserve for Depreciation - Maintenance Equipment 4180 Reserve for Depreciation - Motor Vehicles 4190 Reserve for Depreciation - Miscellaneous Fixed Assets 4200 OTHER RESERVES: 4210 Reserves for Vacancy & Doubtful Member Accounts E. 5000 REVENUE ACCOUNTS. 5100 RENT REVENUE - GROSS POTENTIAL: 5120 Rent Revenue - Apartments or Member Carrying Charges (Coops) 5121 Member Assistance Payments 5130 Rent Revenue - Furniture and Equipment 5140 Rent Revenue - Stores and Commercial 5170 Garage and Parking Spaces 5180 Flexible Subsidy Income 5190 Rent Revenue Miscellaneous
5200 VACANCIES: (See 6370 Also) 5220 Apartments 5230 Furniture and Equipment 5240 Stores and Commercial 5270 Garage and Parking Space 5290 Miscellaneous 5300 ELDERLY AND CONGREGATE SERVICES REVENUE 5311 Swimming Pool Maintenance Expense 5320 Member Group Life Insurance - Expense 5330 Dietary Salaries 5330 Food 5333 Dietary Supplies
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5340 Registered Nurses Payroll 5341 Licensed Practical Nurses Payroll 5342 Other Nursing Salaries 5350 Housekeeping Salaries 5351 Housekeeping Supplies 5352 Other Housekeeping 5360 Drugs and Pharmaceuticals 5361 Medical Salaries 5362 Other Medical 5370 Laundry and Linen 5380 Recreation and Rehabilitation 5390 Other Service Expenses 5400 FINANCIAL REVENUE: 5410 Interest Revenue - Project Operations 5420 Interest Reduction Payments (Section 236 only) 5430 Revenue from Investments - Residual Receipts 5440 Revenue from Investments - Replacement Reserve 5490 Revenue from Investments - Miscellaneous 5900 OTHER REVENUE: 5910 Laundry and Vending Revenue 5920 NSF and Late Charges 5930 Damages and Cleaning Fees 5940 Forfeited Tenant Security Deposits 5990 Other Revenue (specify) F. 6000 PROJECT EXPENSE ACCOUNTS 6200/6300 ADMINISTRATIVE EXPENSES.
Expenses
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6600 DEPRECIATION EXPENSES 6620 Depreciation - Buildings 6630 Depreciation - Fixed Building Equipment 6640 Depreciation - Building Equipment
- Portable 6650 Depreciation - Furniture for Project and Member Use 6660 Depreciation - Furnishings 6670 Depreciation - Maintenance Equipment 6680 Depreciation - Motor Vehicle 6690 Depreciation - Miscellaneous 6700 TAXES & INSURANCE 6710 Real Estate Taxes 6711 Payroll Taxes (Project's Share) 6719 Miscellaneous Taxes, Licenses, and Permits 6720 Property & Liability Insurance (Hazard) 6721 Fidelity Bond Insurance 6722 Workmen's Compensation 6723 Health Insurance and Other Employee Benefits 6729 Other Insurance 6800 FINANCIAL EXPENSES: 6810 Interest on Bonds Payable 6820 Interest on Mortgage Payable 6830 Interest on Notes Payable (Long Term) 6840 Interest on Notes Payable (Short Term) 6850 Mortgage Insurance Premium/Serv Chg 6890 Miscellaneous Financial Expenses 6900 ELDERLY AND CONGREGATE SERVICES EXPENSES / 6911 Swimming Pool Maintenance Expense 6920 Member Group Life Insurance - Expense 6930 Dietary Salaries 6932 Food
/1 Offset to 5300 Accounts for Cost Analysis.
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6933 Dietary Supplies 6940 Registered Nurses Payroll 6941 Licensed Practical Nurses Payroll 6942 Other Nursing Salaries 6950 Housekeeping Salaries 6951 Housekeeping Supplies 6951 Other Housekeeping 6960 Drugs and Pharmaceuticals 6961 Medical Salaries 6962 Other Medical 6970 Laundry and Linen 6980 Recreation and Rehabilitation 6990 Other Service Expenses A. 7000 CORPORATE, MORTGAGOR, OR COOPERATIVE EXPENSES / 7100 COMMUNITY FACILITIES: 7101 Administration 7102 Physical Properties 7103 Medical 7104 Recreation 7105 Community Relations 7110 Officer's Salaries 7120 Legal Expenses 7130-7132 Taxes 7190 Other Expense 7700 Trustee 6-4. EXPLANATION OF ACCOUNTS 1000 ASSET ACCOUNTS: 1100 CURRENT ASSETS: 1110 Petty Cash. This account represents the established size of the imprest fund used to make small cash payments for items such as postage and small amounts of supplies. The
/2 In cooperation with other cooperative corporations.
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Receivable, Section 8 Assistance Payment, Account 1144; Fire Loss Draft Receivable, Account 1145, etc. 1150 Notes Receivable. This account records all notes receivable as they are acquired through debits to the General Journal. Credits to the account come from the Cash Receipts Journal when payment is received. When there are several types of notes receivable, agent should record each type separately in accounts numbered from 1151 to 1159. 1160 Accrued Receivables. This account reflects any accrued income, other than from carrying charges. The account is established by year end journal entry debiting the account for income earned but not received. The offsetting credit is to the appropriate revenue account. After the books are closed, the adjusting entry is reversed. Agents may subdivide the account into accounts 1161, 1162, etc., as necessary. 1170 Investments (Short Term). This account records the amount of project funds invested in short term investments other than those in the Funded Reserves (1300) accounts. When the project has more than one type of short-term investment, agents should record each type separately in accounts numbered 1171 to 1179. The account is credited when the project disposes of any of the investments. 1190 Miscellaneous Current Assets. This account records current assets not otherwise described above. If necessary, agents may subdivide this
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account into specific current asset accounts numbered from 1192 to 1199. 1191 Commercial Security Deposits - Held in Trust. This account records tenant security deposits held by the project, in the name of the project and in a separate bank account. Agents may use deposits to pay for commercial tenant damages and delinquent rents when a commercial tenant vacates. Total funds in the account must at all times equal or exceed the corresponding liability account, 2191
- Commercial Security Deposits - Held in Trust. 1200 PREPAID EXPENSES: 1210 through 1230, Inventory Accounts. Agents record inventory accounts only when the amount on hand at year-end is significant when compared to the total expense for the fiscal year. For example, if shored heating fuel at the end of the fiscal year represents 20% of the total fuel expense for the year, agents should debit by a journal entry the value of the fuel on hand to Fuel Inventory (Account 1210) with an offsetting credit to Fuel Expense (Account 6420). Agents reverse the adjusting entry at the beginning of the next accounting period. 1240 Prepaid Property and Liability Insurance. This account records the unexpired portion of prepaid insurance policies. The account is debited from the Cash Disbursement Journal when an insurance policy is purchased or when monthly payments are made on the policy with the mortgage payment. At the close of the accounting period, agents make an adjusting journal entry crediting the cost of the expired insurance and debiting Account 6720, Property and Liability Insurance expense.
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1250 Prepaid Mortgage Insurance. This account reflects the balance of the mortgage insurance premium (MIP) paid to HUD that is applicable to the following fiscal period. At the close of the accounting period, the account is debited for any prepaid mortgage insurance with an offsetting credit to Account 6850, Mortgage Insurance Premium. The entry is reversed at the beginning of the next accounting period. 1260 Prepaid Advertising. This account reflects the cost of any unused advertising. Similar to the inventory accounts, the unused cost is recorded only when the amount at year-end is significant. The account is established by an adjusting journal entry debiting any unused advertising and crediting Account 6210, Advertising Expense. The entry is reversed at the beginning of the following accounting period.
Accounts 6560 and 6561, Decorating Payroll and Supplies. 1331 Securities - Painting Reserve. The balance of the account reflects the total funds held or invested in securities for the painting reserve account. 1340 Cash - Residual Receipts Reserve. This account records any required deposits to the Residual Receipts Fund held by the mortgagee. Agents Credit the account for disbursements from the fund in amounts authorized by HUD. Interest earned on the account is credited to
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Account 5430, Income from investments - Residual Receipts. 1341 Securities - Residual Receipts Reserve. The balance of this account reflects total funds held or invested in securities by the mortgagee using funds from the Residual Receipt Account. 1350 Cash - General Reserves. This account records amounts paid in by the mortgagee for general purposes. Credits to the account come from disbursements for debt service or other accounts paid from the fund. 1360 Securities - General Reserves. These accounts record funds which are held or invested in securities for general purpose as required by the Certificate of Incorporation. 1365 General Operating Reserve (GOR). This account records monthly deposits made to a special escrow account under the control of the cooperative mortgagor entity. The amount of the required monthly deposit varies by both the GOR account balance and the total amount of monthly member carrying charges. See Paragraph 3 of the cooperative regulatory agreement to determine: (1) what percentage of monthly carrying charges the cooperative must deposit to the account; and (2) conditions for withdrawal from the account. The account provides for contingencies that a cooperative would otherwise meet only through a special assessment to its members. For example,
cooperatives may make disbursements from the account to repurchase stock of withdrawing members or to meet short-term operating deficits because of delinquent receivables from cooperative members. The account is reimbursed (debited) when the cooperative resells the unit or when the cooperative collects the delinquent member carrying charges. Also
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see Account 3235, General Operating Reserve (contra) and Account 3241, Paid-in Surplus for recording amounts paid by members in excess of the initial capital value of their membership. 1370 Apartment Rehabilitation Deposits. This account records deposits received from tenants who rent units owned by the cooperative. The offsetting credit is to Account 2230. 1380 Project Improvement Account. Agents must establish this account for all projects receiving Flexible Subsidy assistance. HUD may also require owners to establish this account as a condition for approving a workout agreement or transfer of physical assets. The restricted asset account is debited when funds are deposited and is credited when funds are transferred from the account. Sources of funds include owner contributions, releases from reserves, Flexible Subsidy payments, retroactive mortgage relief, etc. When Flexible Subsidy assistance is deposited to the Project Improvement Account, the offsetting credit is to Flexible Subsidy Loan Payable (2340), or Capital Improvement Loan Payable (2350), or an Owner's Equity Account (3100). 1400 FIXED ASSETS: 1410 Land. The purchase price of the land plus the cost of improvements to the land are charged to this account. Costs of excavating for basements and expenses applicable to the buildings are not included. The balance of the account represents the total outlay necessary to obtain the land and to make the improvements to it. In some instances, it may be desirable to charge depreciation on certain land improvements. These are charged to a separate account
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the freight and drayage on the furniture, is charged to this account. The cost of furniture purchased from project funds for rental to members is charged to Account 1451. The account is credited as furniture is withdrawn for project or member use. 1460 Furnishings. The cost of furnishings (window shades, venetian blinds shower curtains, hall carpets, etc.) not charged to the cost of the building is recorded in this account. Credits to the account are made when furnishings are withdrawn from use. The balance of the account represents the cost of the furnishings in use. 1470 Maintenance Equipment. The balance of this account represents the cost of project maintenance equipment in use. The account includes items such as janitor's tools, vacuum cleaners, lawnmowers or snowblowing equipment. The cost of equipment is credited when the asset is withdrawn from use. 1480 Motor Vehicles. The cost of buses, trucks, passenger cars etc., is recorded in this account. Each vehicle is shown separately and given an account number in the 1480 group. Equipment withdrawn from use is credited to this account. The balance represents the cost of each vehicle in use. 1490 Miscellaneous Fixed Assets. Agents may record fixed assets for which no other provision is made in this account. If necessary, agents should subdivide this account into specific fixed asset accounts in the 1490 group.
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1500 INVESTMENTS: This account records long-term investments (those expected to be held for more than one year) other than those included in the Fund Reserves (1300) Series. The account is credited when the project disposes of the investment.
1600 DEPOSITS RECEIVABLE:
This account reflects the amount of security and other deposits which are due from tenants, but not received. The account is credited when deposits are collected. 1700 SUSPENSE ACCOUNTS: This account reflects charges for items that are temporarily left unadjusted, such as bad checks from members. When the item (check) is cleared, the account is credited. 1800 ORGANIZATION EXPENSES: This account reflects the cost of organizing or forming the mortgagor entity. These costs may include filing fees, attorney's fees and other recording costs. The account is credited through general journal entries amortizing the original organization costs. 1900 OTHER ASSETS: This account records non-current assets that are not otherwise classified above. Agents should give a descriptive title to any asset included in the 1900 Series. 2000 LIABILITY ACCOUNTS: 2100 CURRENT LIABILITIES: 2110 Accounts Payable. This account reflects the total of unpaid bills other than bills to be paid from the Project Improvement Account. (See Accounts 1380 and 2112). The account is a controlling account supported by an Accounts
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Payable subsidiary ledger or by the file of unpaid vouchers. The account is credited by journal entry for the total of the bills invoiced for payment. Debits to the account come from the Cash Disbursements Journal. After posting, the total of the accounts payable ledger or unpaid vouchers in the voucher file should equal the balance of this controlling account. 2112 Accounts Payable - Project Improvement Items. This account reflects the total of bills vouchered for work items under the Flexible Subsidy
account is used by profit-motivated and limited dividend mortgagor entities. The account records, through journal entry, dividends or distributions declared by the owner but not yet paid. The offsetting debit is to Account 3210, Retained Earnings. The amount of the dividend or distribution should agree with Line 4, Amount Available for Distribution During the Next Fiscal Period, of the Form HUD-93486, Computation of Surplus Cash, Distributions and Residual Receipts. The account is debited when the dividend or distribution is paid. 2150 Accrued Property Taxes. This account records by journal entry the accrual of property taxes incurred and payable in the subsequent year. If necessary, the account may be subdivided to include different types of property taxes accrued (e.g., local real estate, county real estate, personal property taxes, etc.). The entry is reversed at the beginning of the next accounting period.
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2160 Notes Payable (Short-Term). This account records liabilities on notes due within one year. The account is credited when a cash loan is secured by a short-term note. When an note is secured to cancel another project payable, the account is credited through journal entry. The account is debited from the Cash Disbursements Journal when payment is made on the note. 2190 Miscellaneous Current Liabilities. This account records current liabilities not otherwise described above. If necessary, agents may subdivide this account into specific current liability accounts numbered from 2192 to 2199. 2191 Commercial Security Deposits - Held in Trust (Contra). This account records the offsetting liability resulting from transactions recorded in Account 1191. 2200 PREPAID INCOMES: 2210 Prepaid Rents. This account records carrying charges received from members (including
commercial tenants' rents) that apply to future accounting periods. When the revenue is received in advance, this account is credited and Cash (1120) is debited. As the rent or carrying charges become due, agents make a journal entry debiting this account and crediting Members Accounts Receivable (1130). 2220 Prepaid Interest Income. This account records by journal entry all interest income received but not earned at the close of the accounting period. A corresponding debit is made to the Interest Income (5400 Series) account. The entry is reversed at the beginning of the next accounting period.
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2230 Apartment Rehabilitation Deposits. Cooperatives establish this account contra to Account 1370. The balance reflects the cooperative's obligation to refund the deposit if rehabilitation of the rented unit is unnecessary. 2290 Miscellaneous Prepaid Incomes. This account records any prepaid income other than carrying charges, rental, or interest. Agent should establish specific accounts in the 2290 Series to record any miscellaneous prepaid incomes. 2300 LONG-TERM LIABILITIES: 2310 Notes Payable (Long-Term). This account reflects amounts on notes due more than one year from the date of the balance sheet. The amount due within one year is recorded in Account 2160. The account is credited when long-term notes are issued and is debited as principal payments are made on the notes. Interest paid on the note is charged to Account 6830, Interest on Notes Payable (Long-Term). 2311 Notes Payable - Surplus Cash. This account records project obligations (1) payable only from available surplus cash, and (2) in accordance with the terms. 2330 Bonds Payable. When the project is permanently financed through bond issue, the par value of the bonds is charged to this account. The account is debited as payments
