Knowledge Base

Using Sub-Accounts to Track Designated Gifts


From an accounting aspect, income and expense accounts measure the amount of money your organization has received and expended during the current accounting period (year). As of the beginning of the current accounting period (year), income and expense accounts should begin with a zero balance. It is for this reason a change was made in PowerChurch Plus 7 to disallow beginning balances in Income and Expense accounts.

To record the amount of monies designated to specific areas, many organizations use sub-accounts on their main checking account. For instance: If money is received for a missionary, that money would be deposited into a sub-account designated specifically for that missionary. Likewise, when a check is written for that missionary, the same sub-account is reduced. If an accounting year is closed before a check is written, the money will remain in that sub-account because it is categorized as an Asset account. And because sub-accounts appear as "part-of" their owning account on most reports, you can easily retrieve an accurate account balance for your checking account.

Below is an example of how you might enter income and expense entries using sub-accounts to track designated balances:

Income Example:   Debit Credit
01-1110-325 Security Bank J Smith $100.00  
01-4152-325 Missionary J Smith   $100.00
 
Expense Example:   Debit Credit
01-5372-325 Missionary J Smith $100.00  
01-1110-325 Security Bank J Smith   $100.00

Remember, there are other ways to track monies designated to specific purposes. We added a Donor Restriction tracking function to versions 9 and higher. For more information about that, please see our Accounting for Contributions article. It is our recommendation that you speak with a qualified accountant to discuss which options are best for your organization.


Created: 04/12/2004
Last updated: 07/25/2021