Tales From Tech 2 - Issue: 33

Today, I wanted to discuss a few things relating to budgeting. Some of these issues relate to new features added in Version 9, but I also wanted to cover a couple of concepts that may have been misunderstood in the past.

Anyway, thinking about whether catsup and ketchup are really the same thing reminded me of that old saying: Don't count your chickens on a burning bridge unless you brought the black kettle and there's plenty of water under the bridge.

(Mmmm...chicken.)

WHAT IS A BUDGET?

Before we start discussing how to enter budgets, let's take a moment to discuss what budgets are.

When you budget an account, you are indicating how much you expect the account to change and a budget can be positive or negative depending on what kind of change you expect.

Prior to Version 9, you could only enter budgets on detail income or expense accounts.

In Version 9, you can enter a budget on any account, including income, expense, asset, liability, equity or even transfer accounts. In fact, now you can even budget group accounts. (There will be more on budgeting group accounts in a minute, so hold your water buffalo.)

I guess this change means I'm now going to have to go back and give everyone credit that answered true on question 7 of Tales From Tech 2, Volume 23.1.

Anyway, the thing to remember is that the budget is the amount that you expect the account to change. For example, if you budget an asset account $1,000, you are saying that you expect that asset to increase in value by $1,000 over the budgeted period. This IS NOT the same as saying that you expect the account to have a $1,000 balance.

As a side note, please keep in mind that PowerChurch Plus will not prevent you from exceeding a budgeted amount because a budget is not a restriction, it's an expectation. This IS NOT the same as saying that PowerChurch Plus is expecting, however.

HOW DO YOU ENTER A BUDGET?

Entering a budget in Version 9 is fairly simple. Just go to Accounting, choose Fund Accounting and then click on Maintain Chart of Accounts. After this, simply use the Find or Locate options to bring up the account number you want to put in a budget for. Once you have the account number displayed, just go down to the section that lists the Accounting Funds that the account is used in, choose the fund where you want to budget the account and click on the Budget button. This will bring up the Account Details screen opened to the Budget tab where you will enter the budget.

BUDGET BY ACCOUNT OR GROUP

The first thing to consider is how you want to enter the budget and at the top of the screen you should see a line that reads "budget for this account" with a drop down list next to it.

In this drop down list, there are three options. The first reads "no budget for this account," the second option reads "budget directly on this account" and the last item reads "budget by the group."

"No budget for this account" is easy enough to understand (unless you were born and raised in Kyrgyzstan and didn't learn English as a second language). It just means that there isn't a budget. (So far, so good.)

"Budget directly on this account" simply means that you are going to be budgeting this specific account. (I'm beginning to think that this isn't rocket science after all, aren't you?)

The last option is "budget by the group" and this one needs a sentence or five of explanation.

In Version 9, you can either budget an account or you can budget the group that comes before the account. Let's work through an example using the following accounts:
5630-000 UTILITIES (group account)
5635-000 Electricity (detail account)
5645-000 Water (detail account)
5655-000 Gas (detail account)

Let's say that you want to enter a budget for the utilities expenses, but you don't want to enter separate budgets for the Electricity, Water and Gas accounts.

Well, since you can now enter budgets for group accounts, all you have to do is enter your budget on the 5630-000 UTILITIES account (choosing the "budget directly on this account" option) and then simply go to each of the detail accounts (Electricity, Water and Gas) and choose the "budget by the group" option. This tells the program that the budget is listed on the preceding group account.

DISTRIBUTING EVENLY OR PROPORTIONATELY

When you budget an account, you can either enter an amount for each month or you can enter an annual budget. When you enter an annual budget, you can click on either the "distribute evenly" or "distribute proportionately" button.

The "distribute evenly" and "distribute proportionately" buttons will actually do the same thing if there isn't already a budget, but their behavior may be different if there is.

Let me explain...

If you enter an amount in the "enter new annual budget" field and click "distribute evenly," the program will take the amount you entered, divide it by 12 and then enter that amount for each month.

If there isn't already a budget in place or if there is and it's the same each month, the "distribute proportionately" button will actually do the same thing.

The magic happens if there is already a budget and it IS NOT the same each month. For example, maybe you budget your long distance expense account twice as much in December because Ethel spends more time on the phone with the grandchildren around Christmas. If you want to enter a new budget but keep the existing proportions, just type in the new annual budget and click on "distribute proportionately." It's that easy.

Note: Before Version 9, there were not any buttons for distributing your budget. If you had a budget in place and you entered a new one, the amounts would be distributed automatically, based on the amounts that were already there. So, the way the program handles a new budget hasn't changed, but we've added the new buttons to make it all make more sense. (And making sense makes sense, doesn't it?)

Well, that's it for today's issue.