Lowering Expenses

[LydiaGirl123]

Would there ever be a time when you would apply a donation to an expense? Or, would it always go into an income account? Does the system know from the income account that the monies go into the budgeted expense account? I'm a little confused about the whole relationship between income and expenses and BUDGETS!

Also, when I do a Balance Sheet, the checking account amount is close to my actual checkbook amount (I still have to make a few adjustments to get it all balanced). But when I do a Budget Report, I get a negative balance for the checking account. Why is that?

Thanks again!

[JohnDMeyers]

Donations are mostly always entered as income. Occasionally, I will enter a refund from a vendor as a "negative expense" just to keep their line item true to the yearly budget. (I'm sure there are other specific instances when applying a donation to an expense account occur, but they are rare).

That said, it is true that there is no connection between matching up income accounts with associated expense accounts on the standard reports. I have never played with the custom reports enough to know if there is a way to match up income and associated expenses automatically. (I do it manually on an excel spreadsheet for our monthly meetings, and have for years).

So, the short answer is, keep your donations as income, and your expenses as expenses. It will make a truer picture when you want to show the financial state of your organization on your annual report.

As far comparing the checking account balance on the balance sheet to the one on the budget report (with assets selected), realize that the balance sheet always shows the assets as year-to-date amounts. If you select some other time range on the budget report, they will not be the same.

[LydiaGirl123]

Thanks! Once again, you've made it clear and easy to understand.

[Jeff]

One case where we sometimes see people credit an expense account when receiving money is when people reimburse the church for study materials. For example, a class is working through a book and the church buys multiple copies and then members of the class reimburse the church for the cost of the books.

When the church buys the books they debit an expense account. As people reimburse the church they then credit that account to offset the expense. I'm not sure if that is technically correct accounting procedure, but it does help to keep budgets in line.