How's The Church Doing? Report?

[Divine Word Lutheran]

I wish I had taken more than a year of accounting. So, the "Income Statement" tells how a church is doing. Except, it does not include the Mortgage Payment.

Example: Last month, the Income Statement said we "made" $3,500. BUT we also paid a $3,000 mortgage payment. So, actually, we were barely $500 in the black for the month. Next month, the Income Statement says we "made" $1,000. BUT we also made a $2,500 mortgage payment. In reality, we dropped by $1,500 for the month, and if that continued, we would be in a world of hurt. Anyone reading the Income Statement thinks we are doing great.

The Mortgage Payment is a reduction in a liability, and is not an expense, so it is not on the Income Statement.

If I am stating my case clearly, can anyone relate? What report would you use to really tell how the church is doing - month by month?

Thanks. Dean

[NeilZ]

I wish I had taken more than a year of accounting. So, the "Income Statement" tells how a church is doing. Except, it does not include the Mortgage Payment.

Example: Last month, the Income Statement said we "made" $3,500. BUT we also paid a $3,000 mortgage payment. So, actually, we were barely $500 in the black for the month. Next month, the Income Statement says we "made" $1,000. BUT we also made a $2,500 mortgage payment. In reality, we dropped by $1,500 for the month, and if that continued, we would be in a world of hurt. Anyone reading the Income Statement thinks we are doing great.

The Mortgage Payment is a reduction in a liability, and is not an expense, so it is not on the Income Statement.

If I am stating my case clearly, can anyone relate? What report would you use to really tell how the church is doing - month by month?

Thanks. Dean

Are you using the Income/Expense statement?

And I beg to differ about the Mortgage payment not being an expense, it is an expense. Yes it is a reduction of liability too, but it is an expense, and should be shown as such.

[Divine Word Lutheran]

Hmmm.... Well NeilZ, I am going to have to think about that. When we pay the mortgage payment, we credit the checking account for let's say $2000. We debit the Liability for $1500 (which is the principal amount) and we debit the Interest Expense account for $500 for the interest portion.

Yes, I am using Income and Expense report, but the $1500 which is the liability reduction is not an "expense" so it never hits the I/E report.

Maybe I'm doing the transaction wrong.

Dean

[NeilZ]

I just checked what we're doing ... and its not setup as an expense here either, and I thought it was. I need to look at some of the older threads here:
'
viewtopic.php?f=3&t=6665

viewtopic.php?f=3&t=5357&

Both these suggest using the 'cash management report' to show the 'rest of the picture'.

[JohnDMeyers]

Thanks, Neil, for the link to the previous thread.

I will re-post one part of it to make sure it gets noticed.

-------------------------------- re-post -------------------
Just a reminder. There are three financial statements that generally summarize the financial situation at a church.

The Balance Sheet
The Income and Expense Statement
The Cash Flow Statement (or Sources and Uses of Cash)

PowerChurch doesn't really address the third one. It covers non-expense cash inflows and outlays, such as mortgage payments, depreciation, other debt payments, etc.

I have to construct our Cash Flow Statement each year on a spread sheet. It may be the missing piece you are trying to construct by making your mortgage principle an expense. It may be better to look into preparing a Cash Flow statement, instead.

-----------------------end re-post ----------------

Dean:

You probably need to have a spreadsheet handy with your own cash-flow statement to tell at a glimpse "how things are doing".

For example:

Income over Expense (from Income and Expense Statement): $1,700
subtract mortgage payment: -$2,500
add back in depreciation expense: $400
-----------------------------------------------
Total cash flow for month: -$400

[Divine Word Lutheran]

Thanks to all. Hard to believe there isn't a simple cash flow report. Glad I'm not crazy.

Dean