• For More Information - Call 320.251.3388

  • QuickBooks – Fund Accounting

    QuickBooks is a commonly used accounting system for many churches and other ministries, although it has some inherent weaknesses due to it being a single-fund accounting system.  A characteristic of single-fund accounting systems is applying period net income to one predesignated net asset (equity) account.  This is problematic for not-for-profit organizations as they are multi-fund organizations with several program funds; such as building, missions, youth, etc. 

    I would like to provide you with a method to manipulate QuickBooks into a quasi-multi-fund accounting system, which will help ministry leadership better account for resources that God has entrusted to them.  Here is an example:

    ABC Church receives a $20,000 building fund donation to on January 1, 2019 and then on June 30, 2019, spends $15,000 of building fund money on a new roof.  You will need to set up a new net asset (equity) account – Building Fund Net Assets. Here are how the journal entries would look:

     

    January 1, 2019 – Donations Received

    DR – Cash (Checking): $20,000

    CR – Building Fund Offerings: $20,000

    DR – New Assets without Donor Restrictions (Unrestricted): $20,000

    CR – Building Fund Net Assets: $20,000

     

    June 30, 2019 – New Roof Purchased

    DR – Building Maintenance/Repairs Expense: $15,000

    CR – Cash (Checking): $15,000

    DR – Building Fund Net Assets: $15,000

    CR – New Assets without Donor Restrictions (Unrestricted): $15,000

    These journal entries will result in an ending balance of $5,000 in the Building Fund Net Assets account by moving the related $20,000 increase and subsequent $15,000 reduction from Net Assets without Donor Restrictions.  This method can be used for all restricted and designated net asset, revenue and expense transactions. 

© Copyright 2018 Dennison CPA, PC. All rights reserved
%d bloggers like this: