Balance of Temporarily Restricted Net Assets

Fund Accounting, Accounts Payable, Accounts Receivable, Payroll

Moderators: Moderators, Tech Support

Locked
Beccal4
Posts: 5
Joined: Mon Jan 06, 2014 4:36 pm

Balance of Temporarily Restricted Net Assets

Post by Beccal4 »

Checking our balance sheet shows that the balance for the Temporarily Restricted Net Asset "Missions" account is -38,021.42 in December 2013. (I'm not sure if this includes the balance for the 6 months I have "open"?) Anyway, according to my separate calculations on a spreadsheet the balance should be somewhere closer to $2,579.75.

I think I may have gotten confused on releasing temporarily restricted items and such. As I looked over the detailed changes in equity report, it shows expense transactions in which I released temporarily restricted funds as double dipping. It debited the expense and then debited the same amount for the released funds.

I have been staring at and mindlessly examining multiple reports trying to see what happened and how to fix it so that the balance will show the correct amount. :wall: (I have the same problem with our other restricted accounts, i.e. building fund, convoy of hope, etc). Does anyone have any suggestions on how to fix my problem and keep it from happening again?

Matt
Authorized Teaching Consultant
Authorized Teaching Consultant
Posts: 733
Joined: Fri Dec 05, 2003 4:04 pm
Location: Jacksonville, AL

Re: Balance of Temporarily Restricted Net Assets

Post by Matt »

The balance of -38,021.42 shown on your Balance Sheet is a cumulative balance for this account, not just the activity for the 6 months that you have open.

It sounds like you have the expense accounts set up to close into the Temporarily Restricted Net Assets account. Since you are releasing temporarily restricted items when the payments are made you need to set the close to account on the associated expense accounts to the Unrestricted Net Assets account (3110). I would recommend that you run the Detail Changes in Equity Account report for the entire time you have been making postings to this account and review all of the entries that have an expense account tied to them. For all of the expense accounts where you have also made a posting to release temporarily restricted funds go into Maintain Chart of Accounts and change the close to account to the Unrestricted Net Assets account. This will get rid of the double posting. Then rerun the Detail Changes in Equity Account report. It should look a lot better.

Before doing any of the above be sure to make a backup.

Beccal4
Posts: 5
Joined: Mon Jan 06, 2014 4:36 pm

Re: Balance of Temporarily Restricted Net Assets

Post by Beccal4 »

Thanks, Matt. Your answer begs another question. I understand the actual accounting difference between releasing restricted funds and allowing an expense account close to a temporarily restricted account. However, I am not quite sure when I would use one over the other. I am wondering not only for informational purposes, but I have to make a decision over which way is best for our situation. I wasn't consistent in releasing funds. First I didn't understand it. Then I was consistent when I thought I understood when and why it was used. When I saw my balance go crazy after being consistent in releasing funds, I stopped doing it.

Apparently either way, I have some work cut out in attempting to fix my mess. For that reason, I would like to understand the situations which I would choose "releasing" fund over having an expense account close to a temporarily restricted equity account.

zmmcneil
Posts: 13
Joined: Wed Jun 12, 2013 6:10 pm

Re: Balance of Temporarily Restricted Net Assets

Post by zmmcneil »

Thank you. This was a huge help to me as well.
Michelle

Matt
Authorized Teaching Consultant
Authorized Teaching Consultant
Posts: 733
Joined: Fri Dec 05, 2003 4:04 pm
Location: Jacksonville, AL

Re: Balance of Temporarily Restricted Net Assets

Post by Matt »

You can actually do it either way. It just depends on how you want to do your accounting. If you want to go by the book then you should be releasing restricted funds. I do recommend that whichever method you decide to use that you use it consistently across the board.

CoveBaptist
Posts: 44
Joined: Sat Sep 26, 2009 9:46 am

Re: Balance of Temporarily Restricted Net Assets

Post by CoveBaptist »

I am trying to understand Close To Account Set up and Transfer Account Set Up. I've been reading everything I can find so I came across this. We have three funds 01 - General Fund (deposit tithes/offerings/write checks); 02 - Three Money Market Accounts; 03 - Restricted/Designated Funds. My problem is with Restricted Funds and with transferring money from Restricted to the Building Fund Money Market.

Do I gather from this post that no expense account in my 03 account should close to the Net Restricted Equity Account? They should all close to Net Unrestricted Equity?

If so, what would close to Net Restricted Equity?

I have Transfer Accounts set up going out of each account and into each account - but realizing now that perhaps I have some of the close to accounts incorrect since some accounts are restricted and some are not - I'm very confused here.

If anyone has any advise, it would be greatly appreciated!

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Balance of Temporarily Restricted Net Assets

Post by NeilZ »

Since the last poster has opened a new topic about this, please reply to his question in that topic:

viewtopic.php?f=3&t=11432
Neil Zampella

Using PC+ since 1999.

Locked