Accounting for a new investment
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Accounting for a new investment
We have recently merged with another church and now are combining our assets. They have two investment accounts that we will list with the rest of our permanently restricted accounts. How do I create a transaction that is not a contribution but shows the new accounts? Thanks.
Re: Accounting for a new investment
You enter the transaction in Accounting ... simple.cbrown wrote:We have recently merged with another church and now are combining our assets. They have two investment accounts that we will list with the rest of our permanently restricted accounts. How do I create a transaction that is not a contribution but shows the new accounts? Thanks.
Remember however, these are assets, not income, so they're technically not a 'permanently restricted account'.
FWIW .. we keep our investments in a separate Accounting Fund, so it has its own fund balance so it won't skew the normal operating fund. We then transfer any funds we pull from the investments from that fund to Operations when necessary.
That said, here's the basic transaction, if you have an investment account setup as 1325-000, and a net assets for investments at 3310-000, and the amount is 10000.00, the transaction would be:
xx-1325-000 DB 10000.00
xx-3310-000 CR 10000.00
Hope this helps.
Neil Zampella
Using PC+ since 1999.
Using PC+ since 1999.
Re: Accounting for a new investment
Thanks Neil. The transaction is straightforward, but now I'm confused. I thought I had a clear understanding of permanently restricted funds but maybe not. There will be no income coming directly into these accounts. Any interest received will be accounted for in a separate income account. The main amount, or corpus, can't be used but we are free to use the interest for mission activities. Is that not the definition of permanent restriction? Are you saying it's better to receive the interest into the investment account and then transfer it out to an operating account? Thanks again for your help. I think I'm getting my head above water, finally.
Re: Accounting for a new investment
It depends, now that you have explained that its a 'trust' type of investment where the income can be used for a single purpose you would use a Fund Balance (3000 series account) in the Permanently Restricted range. By default Powerchurch will create the header for this.cbrown wrote:Thanks Neil. The transaction is straightforward, but now I'm confused. I thought I had a clear understanding of permanently restricted funds but maybe not. There will be no income coming directly into these accounts. Any interest received will be accounted for in a separate income account. The main amount, or corpus, can't be used but we are free to use the interest for mission activities. Is that not the definition of permanent restriction? Are you saying it's better to receive the interest into the investment account and then transfer it out to an operating account? Thanks again for your help. I think I'm getting my head above water, finally.
That said, you would still keep the investment account under the Investment ASSET area.
Neil Zampella
Using PC+ since 1999.
Using PC+ since 1999.
Re: Accounting for a new investment
Ok thanks again.