Setting up funds & accounting for the first time
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Setting up funds & accounting for the first time
I am setting up our chart of accounts and I am looking at the fund accounting info as well. Our church has several missions and other so-called funds that we contribute to. All of the money is in the same bank account. Should I set up separate funds? If I set up separate funds can I still use my 01 Fund bank account instead of creating a separate chart of accounts for each fund. We don't keep up with anything on these funds currently. We just show an expense at the end of the year for the amount sent to what mission fund. Suggestions?
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Matt
- Authorized Teaching Consultant
- Posts: 733
- Joined: Fri Dec 05, 2003 4:04 pm
- Location: Jacksonville, AL
The answer to your question depends on whether your "funds" need to stand on their own (i.e. have Income Statements and Balance Sheets) for financial reporting purposes or not. Examples of funds that should stand on their own are funds such as the General Fund (for the overall operations of the church) and the Missions Fund (for the missions program). Example of funds where you should just set up income and expense sub accounts within a stand-alone fund would be designated offerings to a specific missionary.
You can have separate funds yet keep all your money in the same bank account as long as you use the same account number for all of the funds. For example, the bank account for the General Fund would be 01-1110-000 and the Missions Fund would be 02-1110-000. Powerchurch will consolidate the accounts into one when doing your bank reconciliation as long as the accounts are set up this way.
You can have separate funds yet keep all your money in the same bank account as long as you use the same account number for all of the funds. For example, the bank account for the General Fund would be 01-1110-000 and the Missions Fund would be 02-1110-000. Powerchurch will consolidate the accounts into one when doing your bank reconciliation as long as the accounts are set up this way.
We do not keep tabs of anything on these funds. We just set aside a set amount or a percentage at the beginning of each year, expense it out as it is to be turned in and then no other accounting is required. They do not have to stand on their own.
Should they be set up as sub-accounts? If so, how would you suggest doing this?
Should they be set up as sub-accounts? If so, how would you suggest doing this?
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Matt
- Authorized Teaching Consultant
- Posts: 733
- Joined: Fri Dec 05, 2003 4:04 pm
- Location: Jacksonville, AL
Here's an example of how to set up sub accounts. Let's say you have two missionaries that your church members give designated gifts for. I would set up subaccounts for these in the Missions Fund (Fund 02) as follows:
Revenue:
Missionary A: 02-4300-101
Missionary B: 02-4300-102
Expenses:
Missionary A: 02-5500-101
Missionary B: 02-5500-102
As money comes in you would debit the bank account (02-1110-000) and credit the applicable revenue account. When you pay the money debit the applicable expense account and credit the bank account.
The key here is setting up both a revenue and expense account for each missionary and then assigning the same last three digits to both accounts. If you set your subaccounts up this way you can then run the Functional Sub Account report at any time to see how much money has come in, how much has been paid out, and the unpaid (or overpaid, as the case may be) balance for each missionary.
Revenue:
Missionary A: 02-4300-101
Missionary B: 02-4300-102
Expenses:
Missionary A: 02-5500-101
Missionary B: 02-5500-102
As money comes in you would debit the bank account (02-1110-000) and credit the applicable revenue account. When you pay the money debit the applicable expense account and credit the bank account.
The key here is setting up both a revenue and expense account for each missionary and then assigning the same last three digits to both accounts. If you set your subaccounts up this way you can then run the Functional Sub Account report at any time to see how much money has come in, how much has been paid out, and the unpaid (or overpaid, as the case may be) balance for each missionary.