Restricted Funds in New Accounting Set-Up

[Dennis Patrick]

I run Windows XP and have Version 9 plus. I am a new user and will be setting up the Accounting Module in the next few days and use PowerChurch for the first time in 2007. My question relates to setting up balances as I create the chart of accounts. The church has balances in a half dozen donor temporary restricted funds which will carry over to 2007. Since expense and income balances start at zero for a new year, I assume that the only way to record the carryover balances for the donor restricted funds is to create restricted equity accounts and record the carryover balances in those restricted equity accounts. Is that assumption correct? Then, do I create income and release accounts which close to the various restricted equity accounts? What happens regarding the statement of income and expense when we start spending the carryover balances, but there is no income showing in the income statement against which to debit the release account and credit the release from restrictions account?

[Matt]

Yes, you will want to record the carryover balances in the restricted equity accounts. You will then need to create income and release accounts that close to the corresponding restricted equity accounts. If you spend a carryover balance in 2007 and there's no corresponding income in 2007 the Income and Expense statement will show a negative balance in the released account and a positive balance in the released from restrictions account once you record the release from restriction. The negative and positive income amounts will net so that total income is unaffected. The debit to the release account will then reduce the balance shown in the corresponding restricted equity account when you run the Balance Sheet report.

[Zorak]

In going through the Setup Accounting Assistant, all of the different moving parts (income, release, equity, and overall released from restrictions accounts) will be set up for you. Simply define what the different temporary or permanent restrictions are and the Assistant will take care of the rest for you.