Fund Accounting Set up

Fund Accounting, Accounts Payable, Accounts Receivable, Payroll

Fund Accounting Set up

Postby mlsparks » Fri Jun 05, 2009 12:52 pm

I have just completed the set up for Fund Accounting, and NOW determined I entered the wrong bank balance. How can I fix that without a transaction showing income that didn't happen to bring the balance up to what it should be?
Speaking of income, how do you suggest handling unrealized gains/losses in a separate investment account which holds mutual funds?
I'm just getting started here and am anxious to get help via this FORUM. Great idea! mlsparks
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Re: Fund Accounting Set up

Postby bookkeeper-sheila » Thu Jul 23, 2009 1:21 pm

The best way I can answer this is with an example we experienced. For years, our preschool ministry ran its own books on it's own software. Value adjustments were setup in a real confusing way at that time, to show on the church's books the net worth of the preschool ministry. One of my jobs was to get the preschool's books merged with the church's books within Powerchurch, so all the bookkeeping was centralized. But the balances in some of the accounts were not matching between the preschool's actuals and the church's value adjustments.

My solution was to make a journal entry using an account called "Fund Balance Adjustment"...funny name, now that I think of it- - another adjustment. Anyway, the example would go like this:

Fund Balance is 01-3001-000 (a fund balance category acct) (this is the whole church's equity)

Fund Balance Adjustment is 10-3001-010 (an acct in individual preschool's accounting fund) (a fund balance category acct)

Transaction would be a credit to Fund Balance Adjustment, and a debit to Fund Balance, thereby correcting the fund balance for the account. Then I would make sure I would put notes in with the journal entry as to why I needed to adjust the fund this case it was for the account conversion to Powerchurch, to make the church's books match the actual account balances in the preschool's records.

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Re: Fund Accounting Set up

Postby JohnDMeyers » Thu Jul 23, 2009 5:45 pm

We do a similar thing.

For each mutual fund asset account, make an asset account for "Adjustment to Market".

So, if you have Mutual Fund A as 01-1150-000 make "Adjustment to Market" as 01-1151-000 (or 01-1150-001) if you use sub-accounts.

Make an equity account like 01-3110-000 "Adjustment to market"

If the adjustment is positive:
DB 01-1151-000
CR 01-3110-000

If it is negative, reverse the DB and CR.

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