Handling event payments

[bfranklin03]

Our church periodically has to pay for event registrations, such as adult softball registration, before the money is actually received from the participants. For the softball example, we register and pay in February, but signups aren't until March or April. What is the appropriate way to handle this in Powerchurch? I can think of two options.

1. When the registration is paid, say $500, make an entry using d)Softball Expense and c)Checking Account along with releasing $500 from the Softball Restriction. Assuming the year starts with a $0 balance in the Softball Fund Balance account, this will create a balance of -$500 in the Softball Fund Balance account. Then, process the payments received by team members as restricted income by making entries using d)Checking Account and c)Softball Restricted Income. This will increase the balance of the Softball Fund Balance account as payments are made, and if everyone pays, the balance will be $0 and ready for next year. At the end of the year, if the Fund Balance account is negative, you know that not all the money was collected.

2. When the registration is paid, treat it as a liability and make an entry using d)Softball Liability and c)Checking Account. This will create a negative liability balance. The income received will then be coded as d)Checking Account and c)Softball Liability to increase the liability account closer to $0. At the end of the season, if the liability is still negative, you could make an entry using d)Softball Expense and c)Softball Liability to zero out the liability account. This would show the church how much should be budgeted from the General Fund based on the balance of the expense account.

I guess the question is should the payments received by team members be counted as income (Option 1), or are these simply pass-through payments that shouldn't be reflected in the income and expense accounts, in which case Option 2 is more appropriate. Any advice is greatly appreciated!

[JohnDMeyers]

I think it more about PowerChurch being a cash system as opposed to an accrual system.

You are trying to record a future event (the receipt of a registration fee that you paid that you haven't yet received).

You can do it in either of the ways you describe.

Because of the cash vs accrual thing, any method you use, you will find yourself creating a temporary negative. Either a negative asset, a negative liability, a negative income, or a negative expense. That's exactly a result of the cash vs accrual thing.

[Matt]

Option 1 is the appropriate way to do the accounting.