User Support Forum

I've looked through the forum and haven't found exactly what i'm looking for.
A collegue and I are having a discussion about the effect of restricted fund expenditures on the income-expense report. From what we can see, they have a negative (expense side) impact on the final NET. For example:
Assuming a theoretical simple accounting that we only have checking account asset, income, expense accounts and 1 restricted fund.
going through the year, we achieve a near net-zero(balanced) income-expense value. However, during the last week of the fiscal year, we write an expense check for $10,000 from the restricted fund (using the release process etc.). This now results on the income-expense report, a net of ($10,000 deficit)!!! This is actually not true, as that $10,000 came out of money already set aside. Yet the report shows that I had a deficit for the year of $10,000!!!
Having real trouble understanding this (understand the math, just not the concept fro the deficit) Can you provide some explanation or where i can get better understanding. If that report goes out as is, we would have a mutiny on our hands!! lol!

sojorner wrote:I've looked through the forum and haven't found exactly what i'm looking for.
A collegue and I are having a discussion about the effect of restricted fund expenditures on the income-expense report. From what we can see, they have a negative (expense side) impact on the final NET. For example:
Assuming a theoretical simple accounting that we only have checking account asset, income, expense accounts and 1 restricted fund.
going through the year, we achieve a near net-zero(balanced) income-expense value. However, during the last week of the fiscal year, we write an expense check for $10,000 from the restricted fund (using the release process etc.). This now results on the income-expense report, a net of ($10,000 deficit)!!! This is actually not true, as that $10,000 came out of money already set aside. Yet the report shows that I had a deficit for the year of $10,000!!!
Having real trouble understanding this (understand the math, just not the concept fro the deficit) Can you provide some explanation or where i can get better understanding. If that report goes out as is, we would have a mutiny on our hands!! lol!

You have to remember that the Income and Expense report is cash basis. It will reflect the income and expenses that have occurred DURING THE CURRENT YEAR or period of the report. If the restricted funds came in during the current year, you would have shown that income in the I&E report.

However, if you're releasing funds from a prior year, the amount is moved from the Restricted Net Assets, to the Unrestricted Net Assets, but since the income did not come in during that year, the expense will show as negative. You'll see it better if you run a balance sheet before you release the funds, then after, you'll see the restricted net asset fund balance decrease by that amount.