Explanation of using Restricted and Release Funds

Fund Accounting, Accounts Payable, Accounts Receivable, Payroll

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FUMCFairfield
Posts: 19
Joined: Tue Jan 22, 2019 1:05 pm

Explanation of using Restricted and Release Funds

Post by FUMCFairfield »

Understand about restricted funds. In QB income went into Income for specific restricted fund. When I paid a check, that expense came out of same income fund. At year end any current year remaining balance was transferred to the Capital section that had the specified restricted balance totals for all years in the account. So if we had a one time restriction contribution from all members then one check would clear that out.
New to working with Power Church, what would be the process for recording the income and use of the amount?

Also could someone inform me why a check does not print in line with the others when viewing Trial Balance or account activity?

Thanks greatly.

NeilZ
Posts: 10435
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
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Re: Explanation of using Restricted and Release Funds

Post by NeilZ »

FUMCFairfield wrote:Understand about restricted funds. In QB income went into Income for specific restricted fund. When I paid a check, that expense came out of same income fund. At year end any current year remaining balance was transferred to the Capital section that had the specified restricted balance totals for all years in the account. So if we had a one time restriction contribution from all members then one check would clear that out.
New to working with Power Church, what would be the process for recording the income and use of the amount?
Income, I'm assuming would come in directly from the Contributions Module. You just need to have a Contribution Fund setup to point to the proper income account. I'm also assuming that you either created the Temp Restricted account using the Accounting Setup, or using the Maintain List of Donor Restrictions. If you didn't you won't see the restriction listed in the RELEASE RESTRICTED FUNDS list when you click on that button when writing a check in Accounts Payable.

Also, the fund balances DOES NOT get transferred anywhere at the end of the year. It remains in the fund balance account, this way the funds are available one year to another.

You have to forget the way QB did things. Powerchurch separates everything. May I suggest that your congregation invest in the online video training for Fund Accounting found here: https://www.powerchurch.com/training/vi ... .php?id=15

It covers all aspects of Fund Accounting for churches using Powerchurch. it does NOT cover Accounts Payable which is a separate training.

Accounts Payable is a different module, but creates transactions that flow to Fund Accounting. Nothing is actually posted to the accounts, until you post it in the related module (Accounts Payable, Accounts Receivable, and Payroll) which then creates transactions that go into the unposted transactions queue in Funds Accounting. Once you post transactions in Fund Accounting, all the accounts are updated.
Also could someone inform me why a check does not print in line with the others when viewing Trial Balance or account activity?

Thanks greatly.
Um, the Trial Balance report shows totals in each account, not checks. In the Account Activity I'm not sure what you mean by 'not print in line'?
Neil Zampella

Using PC+ since 1999.

FUMCFairfield
Posts: 19
Joined: Tue Jan 22, 2019 1:05 pm

Re: Explanation of using Restricted and Release Funds

Post by FUMCFairfield »

Sorry Neil I meant the Account Activity Report. In the bank account check #'s are on the left margin but one check is indented about 5/6 spaces. Do you know why?

Ref Posting to restricted accts; yes G/L is setup for a Restricted Fund Equity acct (3200), a Restricted Fund Income acct (4200) and a Release Restricted Acct (4800).
So money comes in thru the contribution module and gets posted to the 4200 acct. Then I write a check to use those funds and I code it to an expense? If I check the box to release restricted fund monies what entry does the program make? I was under the impression that if a member donates for a restricted use there would be no expense, rather a use of funds given. Just trying to understand a little more completely.

I have reviewed many on line tutorials, and have studied the manual given to me as a result of not being able to attend a seminar that was paid to attend and I could not.

Thanks

NeilZ
Posts: 10435
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Explanation of using Restricted and Release Funds

Post by NeilZ »

FUMCFairfield wrote:Sorry Neil I meant the Account Activity Report. In the bank account check #'s are on the left margin but one check is indented about 5/6 spaces. Do you know why?
I'm assuming you mean the reference column?? This is a manual entry, unless a check is printed, it could be that the person entered it with spaces, there is no other way this could happen.
Ref Posting to restricted accts; yes G/L is setup for a Restricted Fund Equity acct (3200), a Restricted Fund Income acct (4200) and a Release Restricted Acct (4800).
So money comes in thru the contribution module and gets posted to the 4200 acct. Then I write a check to use those funds and I code it to an expense? If I check the box to release restricted fund monies what entry does the program make? I was under the impression that if a member donates for a restricted use there would be no expense, rather a use of funds given. Just trying to understand a little more completely.

I have reviewed many on line tutorials, and have studied the manual given to me as a result of not being able to attend a seminar that was paid to attend and I could not.

Thanks
You always have to write against an expense of some kind, this is a double entry system, so every DEBIT must have a CREDIT. When writing a check the CHECKING account is CREDITed, and the EXPENSE is DEBITed.

So if funds were given to buy new choir robes, the Restricted income account would be CREDITed, the Checking account would be DEBITed, and the restricted FUND BALANCE (remember non-profits do not user the term equity) account is automatically updated to reflect the income.

When you write a check to use the funds, you would CREDIT the checking account, and DEBIT the Choir Robe Expense (or a Music expense account that covers this). When you click the Release Restricted Funds button, it will add a two line transaction that will DEBIT the release account, and CREDIT the 4999-000 Release from Restriction account that the system. What that last transaction does is basically move the funds from the restricted fund balance (or net assets) to the unrestricted fund balance (or unrestricted net assets).
Neil Zampella

Using PC+ since 1999.

FUMCFairfield
Posts: 19
Joined: Tue Jan 22, 2019 1:05 pm

Re: Explanation of using Restricted and Release Funds

Post by FUMCFairfield »

Thanks Neil!

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