Do Temp Restricted Accounts need an expense account

[cbrown]

Neil, I've read conflicting info about this topic. The Accounting for Contributions paper seems to say that using release accounts doesn't require the use of Expense Accounts, but I've read in this forum that they do, I think. In any case, I have been using Exp Accts with Release accounts and I don't know if I should reverse them all. I am showing large negatives in my Fund Balance accounts that should not be there, so something needs correcting. Thanks.

[NeilZ]

Neil, I've read conflicting info about this topic. The Accounting for Contributions paper seems to say that using release accounts doesn't require the use of Expense Accounts, but I've read in this forum that they do, I think. In any case, I have been using Exp Accts with Release accounts and I don't know if I should reverse them all. I am showing large negatives in my Fund Balance accounts that should not be there, so something needs correcting. Thanks.

No they don't NEED an expense account. Its optional if the funds under temp restrictions can be used for many different reasons. For example, you have a temp restriction on a special fund to cover worship needs. OK .. not the best example but its early.

The funds can be used to purchase candles, so the expense would be to 'expendable worship supplies 5240-000, also repair AV equipment "AV equip maint" 5360-000, and so on.

What you have been doing is correct ... the release account just moves the funds from the temp restricted fund balance account (Ex: 3200-000) to the unrestricted fund balance 3110-000. The checks are written against the normal checking account as the unrestricted and restricted funds are all in that account.

The normal transaction looks like this using the standard account number, as well as the release accounts Checking 01- 1110-000 Released from restriction 01-4999-000, for this example expense is 01-5240-000 temp fund release is 01-4810-000 .. explaination in Italics

First two lines are standard check transaction
01-1110-000 Checking CR 200.00
01-5240-000 Exp Supplie DB 200.00

These are the release - NOTE: depending on the type of account a Debit can add to it (expenses & assets) or subtract from it (liabilities, fund balance, & income) same with a Credit -
01-4810-000 temp FUnd DB 200.00 Debits -subtracts- from the Temp Restricted Fund Balance for worship
01-4999-000 Rel From Rest CR 200.00 Credit -adds to - the unrestricted fund balance
The system knows to subtract from the Temp Restricted Fund Balance and add to the Unrestricted fund balance due to the use of these 4800 series account and 4999 account

The problem you're seeing may be that you're releasing funds that aren't there.

[cbrown]

Thanks for the quick response. I need to look for the "funds that aren't there". I appreciate the clarification. Have a great holiday season!

[NeilZ]

Thanks for the quick response. I need to look for the "funds that aren't there". I appreciate the clarification. Have a great holiday season!

I think I should explain ... I meant that you may be releasing from accounts where funds have been used up.

[cbrown]

Neil, I've been using expense accounts with transactions using temp release accounts. Here is an example.

01-1120 checking
01-6370 Mission outreach expense
01-4815 Mission Outreach release
01-4999 release from restriction

Right now I have all Temp Restricted expense accounts closing to their associated fund balance accounts. For instance 01-6370 closes to 01-3215. Does this look correct to you?

My unrestricted fund accounts close to 01-3110. Unrestricted fund exp accounts close to 01-3110

[NeilZ]

Neil, I've been using expense accounts with transactions using temp release accounts. Here is an example.

01-1120 checking
01-6370 Mission outreach expense
01-4815 Mission Outreach release
01-4999 release from restriction

Right now I have all Temp Restricted expense accounts closing to their associated fund balance accounts. For instance 01-6370 closes to 01-3215. Does this look correct to you?

My unrestricted fund accounts close to 01-3110. Unrestricted fund exp accounts close to 01-3110

Actually ... no ... that may be the issue. The expenses should all close to the unrestricted fund balance 01-3110 ... the reason is you are releasing funds from the 01-3215 to 01-3110 ... if they close to 3215 .. you're double debiting.!! I can tell that you may have added those expense accounts after the donor restricted fund was created using the Maintain the List of Donor Restrictions module. That module would properly set the expense account to close to 01-3110.

Fix that, and I'm fairly sure you'll fix the issue.

What I would to to test this is backup the accounting files using the Powerchurch backup module .. select accounting only. Do this so you can revert if this next step goes south. Run a Balance Sheet report, which should show the negative numbers. Then create a few transactions in Fund Accounting DEBITING the temp restricted fund balance accounts for the amount shown on the balance sheet, and crediting the unrestricted fund balance. Then run another balance sheet. The Total Assets should STILL equal the total of the current liabilities and the Net Assets,just that the Unrestricted net asset is now reflecting the proper amount it should.

If it doesn't look right, you can revert, but that balance sheet before and after the changes should have the same bottom line ASSETS = TOTAL LIABILITIES & FUND BALANCE.

[cbrown]

That's why my numbers didn't line up. I'll try your suggestions and let you know. Thanks.

[cbrown]

Perfect! Thanks again!

[NeilZ]

Perfect! Thanks again!

Glad to hear it worked