User Support Forum

This is not my first time posting, but I am still very much floundering around trying to get FA set up (lack of training/experience in accounting is by far the greatest source of difficulties ). We are using PC+ v10.

We are not tracking any liabilities through the program. (A very small, old church; no mortgage, no church-owned vehicles, etc.) We want to use a single fund (01) in FA.

My question: Should the total of the balances in equity accounts associated with a particular bank account always equal the current balance of the bank account?

Examples:

In addition to the unrestricted equity account, 10 donor-restricted equity accounts are associated with the General Checking account (01-1110). If I run a tally of the 11 equity account balances at any given time, should that total equal the current balance in 01-1110?

Contributions toward three donor-restricted memorials (each with its own income/release/equity and expense accounts) are deposited in General Checking, then transferred to the Restricted Funds bank account (01-1230). Assuming I keep up with the transfers as the deposits are made, should the total of the three equity accounts always be the same as the current balance in 01-1230?

The Building Fund bank account (01-1220) has three accounts associated with it. Again, should the total of the equity balances associated with those three accounts match the current balance of 01-1220 at all times?

Or, do I have the accounts set up wrong?

Any and all help will be gratefully accepted!

My question: Should the total of the balances in equity accounts associated with a particular bank account always equal the current balance of the bank account?

There is nothing in the program that associates an equity account with a particular asset accounts. So this is not enforced in the program.

In addition to the unrestricted equity account, 10 donor-restricted equity accounts are associated with the General Checking account (01-1110). If I run a tally of the 11 equity account balances at any given time, should that total equal the current balance in 01-1110?

The general accounting equation is:
Total Assets - Total Liabilities = Total Equity

Your post says the church has no liabilities, if there are no other assets other than cash accounts, then total cash would equal total equity. If you have any other assets other than cash accounts, then they might not equal.

Contributions toward three donor-restricted memorials (each with its own income/release/equity and expense accounts) are deposited in General Checking, then transferred to the Restricted Funds bank account (01-1230). Assuming I keep up with the transfers as the deposits are made, should the total of the three equity accounts always be the same as the current balance in 01-1230?

If the beginning balance of the equity accounts started off correctly, then after the transfer is made from the General Checking to the Restriced Checking account, it sounds like the balances should be the same.

The Building Fund bank account (01-1220) has three accounts associated with it. Again, should the total of the equity balances associated with those three accounts match the current balance of 01-1220 at all times?

If all the money for the Building fund is in the 01-1220 account then yes, the total of the equities for the building fund should match the total in the 01-1220 account. the same as above, if building fund money is deposited in the 01-1110 account, it will not match until the money has been transfered into the 01-1220 account.

It might be good to walk through a transaction so you can see how the money moves. Say you receive a $100 for the building fund. Here would be the transaction to record the receipt.

01-1110 General Checking $100 (db) (increase)
01-4510 Building Fund Income $100 (cr) (increase)

What has happened is General Checking is increased by $100. The income account shows $100, if we ran a balance sheet at this point, the building fund equity account would be increased by $100 because the income account was increased.

Move the money from the General Checking to the Building Fund Checking account:

01-1220 Building Fund Checking $100 (db) (increase)
01-1110 General Checking $100 (cr) (decrease)

This transaction deceases the General Checking and increases the Building Fund Checking. The balance of the equity is not changed. To change the balance of an equity account, we must use an income, expense, transfer or equity account in the transaction.

Thank you, Jeff. Your reply is very helpful in my understanding how things "work".

A related question: What about interest that has accrued in the savings account? What I have done is db (increase) the savings bank account (01-1210) and cr (increase) the interest income account (01-4515). Does this then automatically increase the related equity account by the amount that I entered (in this case, the unrestricted equity account 01-3110)?

It depends on what account the interest income account closes to. If the 01-4515 closes to a restricted equity account, then yes it will.

Jeff, you are helping me tremendously today! Please help me think this through....

Jeff wrote:It depends on what account the interest income account closes to. If the 01-4515 closes to a restricted equity account, then yes it will.

At present, 01-4515 closes to the unrestricted equity account. Given that condition:

If I start out with the balance in the Restricted Funds bank account (01-1230) equal to the total of the 3 restricted equity accounts (for each of the 3 memorial accounts in 01-1230), then when I enter interest income for 01-1230, the totals of the equity accounts will differ from the balance in 01-1230 by the amount of the interest. Is that right?

If I want those two values (01-1230 balance and total of restricted equity accounts) to "track" with each other, then 01-4515 needs to close to one of the restricted equity accounts. Is that correct?

Can I manually set up a new equity account Restricted Fund Interest for 01-4515 to close to?

If I start out with the balance in the Restricted Funds bank account (01-1230) equal to the total of the 3 restricted equity accounts (for each of the 3 memorial accounts in 01-1230), then when I enter interest income for 01-1230, the totals of the equity accounts will differ from the balance in 01-1230 by the amount of the interest. Is that right?

That is correct.

If I want those two values (01-1230 balance and total of restricted equity accounts) to "track" with each other, then 01-4515 needs to close to one of the restricted equity accounts. Is that correct?

That is also correct, the question is how do you divide the interest between the restricted accounts. Another thing to throw out here, interest earned from restricted amounts might be able to be considered unrestricted. This is a policy that your church board needs determine. Also if you have an endowment, the endowment will specify if the interest is restricted.

Can I manually set up a new equity account Restricted Fund Interest for 01-4515 to close to?

You could setup a fourth equity account to hold the amount of interest, what would you do with the money in the account, does it just grow forever?

what would you do with the money in the account, does it just grow forever?

Uh, gee.... I hadn't really thought about it.

interest earned from restricted amounts might be able to be considered unrestricted. This is a policy that your church board needs determine.

I've often wondered about this. I guess it's time to ask a few direct questions! Thanks, again, for all your help, Jeff.

(I've been studying forum posts for months now and you guys are terrific!)