Using Transfer Accounts (9000) Series

[Alaraujo]

Because we maintain 2 checking accounts (General Fund and Ministries), Designated funds come into the Gen Fund thru the Contributions Module and are posted in the Pass Thru account as a Liability. We later issue a check from the GF to the Ministry fund by Crediting GF checking and Debiting the Pass Thru Liability account.

If this is correct, what is the Transfer Account in the Expense section (9000) used for?

[JohnDMeyers]

The transfer accounts are made to be used in a manner in which you are using the liability accounts in this case.

The only difference, or problem with using a liability account is that you don't owe the money to anyone outside the church. In other words, you don't have a liability.

It would only matter if you were ever looking to borrow money, get a grant, or some other activity which requires an outside party to evaluate the net worth of your church.

Just setup a transfer account in each fund. I use the same 4-digit number for the same transaction.

For example,
01-9120-000 and 02-9120-000

Money comes into the designated fund:
DB 02-1120-000 designated checking $40.00
CR 02-4110-000 designated income $40.00

Transfer from the designated fund:
CR 02-1120-000 designated checking $40.00
DB 02-9120-000 transfer for this purpose $40.00

Receive in the General Fund:
DB 01-1110-000 checking $40.00
CR 01-9120-000 transfer for this purpose $40.00

[Alaraujo]

Thank you John. Very helpful.