User Support Forum

After running a "Balance Sheet" report, I noticed that I have two temporarily restricted accounts that show a negative balance.

1. How could this have happened?

2. How do I correct it?

Thank you!

Usually this can be attributed to one of two things. Either you have spent more money than came in for that restriction, or more likely, you have the expense accounts set to close to restricted equity instead of unrestricted.

When money is released from restriction, the balance is moved from restricted equity to unrestricted equity. If the expense account is set to close to restricted equity, the money is taken out twice.

To check this, go to the Maintain Chart of Accounts screen under the Fund Accounting menu, locate the expense account that is related to this restriction, then in the middle of the screen, where it reads "This account is used in the following funds," click the Detail button.

There you will find the close to account assignment. The field reads "At the end of the year this account closes to:" This should be UNrestricted equity for expense accounts.

Take a look at the "Accounting For Contributions" document for (much) more information.

http://www.powerchurch.com/support/answ ... icle_id=58

You can also use the close to report to check which accounts close to a particular equity account.

I found out that ALL of my temp restricted accounts closed to the same equity account, rather than unrestricted net assets (equity).

I have changed that, so now how do I correct the entries to where there are no negative balances?

Another question:

The document to which you refer, "Accounting for Contributions" states that (on page 3), "The income account is setup to close to the equity account for this restriction."

It also says, "This release account closes to the new equity account as well."

It doesn't say anything about closing to the Unrestricted Equity Account.

What am I missing?

fstuart wrote:"The income account is setup to close to the equity account for this restriction."

It also says, "This release account closes to the new equity account as well."

It doesn't say anything about closing to the Unrestricted Equity Account.

What am I missing?

The overall "Released From Restrictions" account, usually 4999-000, closes to unrestricted equity. The expense accounts close to unrestricted equity. Any unrestricted income accounts (tithes & offerings, general fund, etc) close to unrestricted equity.

If negative balances still show on the Balance Sheet after correcting the close to account assignments (make sure that the expense accounts are assigned correctly) then either the original transactions were entered incorrectly, beginning balances were not entered correctly for the restricted funds, or more money was actually spent than was available.

Let me make sure I understand:

ALL temp restricted accounts will close to the unrestricted equity account?

None of my temp restricted accounts have beginning balances. Is it a matter of just assigning a beginning balance? OR, do I move money from a carry forward account to the temp restricted income account?

For each restriction you have three accounts:

• The equity account which will track the balance of the restriction. When you set up the equity account, it is marked as a temp or permanent restriction.
  
  The income account tracks the amount of income associated with the restriction.
  
  And a release account which tracks when the money was released from the restriction.

The only accounts that should be closing to a particular restriction are the income account and the release account. All expense accounts should be closing to an unrestricted equity account.

I had a customer yesterday that wen they wrote a check for a restricted amount credited the bank and debited the restiction income account and also released the money. This had the effect of doubling the amount used because they reduced the income account when they debited it.