00-QBooks Fund Accounting FAQ 0601-06 ZZqbb

 

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                             TO:  Interested Ministries                                                                                                        FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                                                     FILE:  0601-06/qbb

                              RE:  QBs or QuickBooks (TM)  FUND ACCTG FAQ                                                       Originated in December 1996                                             

        The Frequently Asked Questions (FAQs) below have surfaced as we have, since their beginning, "QBacked or Quarter Backed" Ministries in their use of   QuickBooks  ™  (QB)   and Quicken  via the desktop to do Ministry Fund Accounting.  As we all no doubt recognize, Quicken's emphasis is personal finance and we do not generally advice its use for Ministry Fund Accounting.

        But, QuickBooks (QBs)  (with its Equity and Class features plus integrated Payroll, Receivables and Payables), in our opinion, is precisely what most Small Ministries need in order to do their  Fund Accounting  and be good stewards of their finances.   Be sure and understand our position in FAQ #5 below about using QBs to do your Donation or Contribution record keeping, or accounting.   Please go to  Sitemap  for more information about the use of QBs at Ministries. Another such resource is found at this link:  http://groups.yahoo.com/group/qbunch    Also please go to  QBOE. and learn about using  QuickBooks  ™  (QB) on the Web (QBs Online Edition).    
 
        By the way --- we are convinced that, in order  to do your needed Ministry Fund Accounting,  you do NOT need the latest version of the QBs Pro, or any of the Non Profit versions,   We point you to   www.ebay.com   where you can obtain an unused QBs Pro older version very inexpensively.  Be sure it is compatible with versions of your existing Computer software, etc.  If you already have a version of QBs Pro you might find of value this Self-Help Hands-On resource when you  Click Here.  Let us know at  Jim@bcidot.org  if you would like this entire 0601-06 document in WORD format.

    Our numbered F)requently A)sked Q)uestions  - FAQ - list appears below; please click on the FAQs of interest to you.

  1. What do you mean when you say "Ministry Fund Accounting"?
  2. Please tell us about the different methods to do Ministry Fund Accounting within QuickBooks (QBs)
  3. Why do you recommend QBs Fund Accounting Method One ... and can QBs handle different sets of books you mention above?
  4. Can QBs handle non calendar Fiscal Years?
  5. What about QBs doing our contribution record keeping?
  6. What is Functional Expense accounting (or GAAP)  that is required by our CPA firm and the IRS ... and can QBs do this for us?
  7. What about other accounting regulations that is required by our CPA firm  .... how is QBs involved?
  8. We are just about sold on using QBs in our Ministry in the way they you describe.  But we would like to experiment some before we make a leap like this.  Any thoughts?
  9. Do you know of any other QBs Ministry Finance resources?
  10. List of "Frequently Used Terms" applicable to this Onliner Document

- FAQ # 1 - 

Q>  What do you mean when you say Ministry Fund Accounting?

A>  To answer this entire group of FAQs here, you will benefit best by going to  0041  and digest our expressed foundational Ministry Fund Accounting views within this writing per the topics below. Such an understanding will greatly assist you as we answer subsequent FAQ questions.

We are convinced that proper use of QuickBooks  ™ for Fund Accounting can help you carry out such fiscal stewardship responsibilities as you:

  • Efficiently account for money received;
  • Disburse money within imposed limits;
  • Timely know ' imposed limits' information per the balances in SPFunds;
  • Gain GPFund information and "Actual to Budget" status;
  • Know amount of generic Money on Deposit (note:  do not marry imposed fund balances to specific Bank Accts);.
  • Immediately know which funds have an investment in this "Pooled" or generic Money on Deposit;
  • Appropriately handle aspects of financial Giving Records.

Return to the FAQ List

- FAQ # 2 -

Q>   Can you help us in our use of QuickBooks at our Ministry?  Please tell us about this and the different methods to do Ministry Fund Accounting within QuickBooks (QBs) product. 

        A>  Please go to  0199  where we make known how we "Coach" Ministries in their use of QBs to do their unique accounting as set forth within  0041.  We are told that there are many QuickBooks ™  (QB)  users via the Microsoft and Mac formats. You can readily use QBs to do Ministry Fund Accounting (99) via at least four methods.

Recommended Method One ... Click here for details below
     Use QBs Income/Expend accts for the GPFund:  Use QBs  Equity Accts for named SPFunds; PLUS (be sure you understand this vital issue) your use of QBs  Classes for Beginning Balances and P&L therein (or by types of Income/Expend within applicable SPFund).  Be sure you understand the ability to "filter" for a variety of needed SPFund reporting purposes.
 Method Two ..Please  Click here  for details below
      Same as Method One, but you do not use the QBs Class for types of Income/Expense within applicable SPFund. 
Method Three ...Please  Click here for details below
        Same as Method One,  but you do not use QB's normal Income and Expense feature since all GPFund and SPFund activity flows within applicable QBs  Equity Accounts.   
Method Four... Please  Click here for details below
      This is the Intuit suggested method where you use QBs  Income/Expend accts for all Income/Expend and then use the QBs  classes to primarily specify the applicable SPFund involved.  
Other Methods ...
          See  2021  for what others have shared about QBs  Ministry Fund Accounting methods they use, etc.

QB Fund Accounting Method One (10)

  •    The Ministry structures its SPFunds as QBs  Equity type Accounts - notice the QBs  Equity Chart of Account Types in the condensed  0770 Sample below.:
QB Chart of      
Acct Types Assets:    
Bank     Checking- Savings  $ 16,787  
Fixed Assets     Land Bldg and Equipment    
         Total Assets    $16,787
     
Liabilities:    
Acct Pay         Payables    $  1,689
Fund Balance - Net Assets:    
  QBs Equity Accounts    
Equity          Donor Restrictions  $   4,700  
Equity          Board Discretionary   $ 15,774  
            Total SPFund  $ 20,474  
  QBs GPFund YTD  (Loss)   $  (5,376)  $15,098
       Total Liabl and Fund Bal    $16,787
  Click and see contents of colored Hyperlinks above    
  •     Some of you prefer to use QBs  Long Term Liability type accounts, but we prefer the "QBs Equity" type accounts because this implies available Ministry resources, or unspent Ministry Net Income , while "Liability" is usually construed to mean unpaid debt to creditors.
  •    One of the major advantages in using this Method is that it allows you to immediately know, when publishing a Balance Sheet,  who belongs to the pooled monies on deposit. 
  •    Please go to  0622  for more Fund Accounting via QBs Method One perspective.
  •    Then use QBs Classes for Beginning Balances and "reasons why SPFunds change"; see a sample SPFunds Class Integrity Proof report below:.

    • Jul 1, xxx0 - May 31, xxx1

      First of Year Balances

      95,000.00

      SPFunds Income

      Earned Income

      50,600.00

      Donation Income

      60,400.00

      Total SPFund Income

      111,000.00

      SPFunds Expenditures

      Operating Expenses

      -116,525.95

      FAsset Acquisition

      -74,500.00

      AllElse Expenditures

      -1,000.00

      Total SPFunds Expenditures (1)

      -192,025.95

      Cross Fund Income

      6,500.00

      Grand Total SPFunds

      20,474.05
  •  
  •    The GPFund uses the regular QBs Income and Expenses;
  •    Also use QBs Classes for GPFund departments or what we call D)ollar A)ccountability G)roups - DAGs;.
  •    Utilize the QBs A)ctual to B)udget -A to B- features for GPFund spending controls - see GPFund "A to B" below as an example.

    •  

    • Jul 1, xxx9 to May 31, xxx0 (91)

      Actual

      Budget

      Variance

      Income

      AllElse Income

      1,500.00

      Donations Income

      77,800.00

      Earned Income

      50,000.00

      Total Income

      129,300.00

      Expense

      Salaries and Benefits

      57,500.00

      57,666.67

      -166.67

      Supplies and Expenses

      47,925.85

      48,075.00

      -149.15

      Debt Servicing

      15,000.00

      15,041.67

      -41.67

      FAsset Acquisitions

      5,000.00

      5,000.00

      0.00

      AllElse Expenses

      2,750.00

      2,758.33

      -8.33

      Total Expense

      128,175.85

      128,541.67

      -365.82

      Net

      1,124.15

      		      

      Cross Funds Expense (1)

      6,500.00

      6,516.67

      -16.67

      QB GPFund  YTD (loss)

      (5,375.85)

      		      

   CAUTION:  This Fund Acctg Method obviously does NOT permit QBs to combine all of the Ministry's Income and Expenditures (some are QBs Classes and some are not, etc). 
    The Big Pix Sample. (95) below meets this need as provided via an Excel driven report that combines the GPFund and the SPFunds (not from the data above).  Even more important,  this provides a one-page condensed over view of all the finances that is often helpful to your Board members as they take a "Big Pix" view of your finances.  When you Click Here you will find a "Big Pix" type report that also includes a recap of your applicable Building/Construction activity --- plus an alternative way to account for and report Defrayments (see "Event Reimb/Other" Revenue below).

    Big Pix

For 11     Months (97)
(1)Special

(2)General

         GPF Expenditure

Totals

 Funds (SPFs)

Fund (GPF)

           Budget To Date

Variance

Revenue:

$138,200

Donations

$60,400

$77,800

$102,100

Event Reimb/Other

$50,600

$51,500

$240,300

Total

$111,000

$129,300

Expenditures:

$57,500

Salaries/Benefits

$57,500

$57,666

($166)

$164,452

Operating Costs

$116,526

$47,926

$48,075

($149)

$74,500

Property Acquisition

$74,500

$15,000

Debt Servicing

$15,000

$15,042

($42)

$5,000

Mission Support

$5,000

$5,000

$0

$3,750

AllElse Expenses

$1,000

$2,750

$2,758

($8)

$0

Cross Funds

($6,500)

$6,500

$6,517

($17)

$320,202

Total

$185,526

$134,676

$135,058

($382)

($79,902)

($74,526)

($5,376)

Annual GPF Budget

$147,470

Weekly Need

2,836

Begin Balance

$95,000

GPF Income to date

$129,300

End Balance as computed

$20,474

Divided by wks to date

48

"Spoken for" as follows:

Weekly average

$2,694

Weekly difference

$142

Donor Restricted

$4,700

Ending:

Board Discretionary

$15,774

Bank Balances

$16,787

Less: Liabilities

$1,689

Down proof is:

$15,098

TOTAL FUNDS

$20,474

($5,376)

Cross proof is:

$15,098

                    (1)  Via QBs Class "reasons why Special Funds change," or Income and Expenditures
                    (2)  Via QBs Income  and Expenditures

  •     Please go to  0079  for detailed QBs Method One implementation steps as we have you set up your own QBs file and walk you through the QBs Method One setup and you do some transactions processing and process the QBs Method One Proof Reports. 

  QBs Method Two - QBOE (14) -

        This QBs Fund Acctg method Method Two pertains almost exclusively to the use of QuickBooks for the Web -- QBOE via the Web -- as it involves use of QBs Equity Accounts for Fund Accounting ---- it does NOT involve the use of the QBs Class feature.  QBOE now allows the use of QBs Classes beginning in 2005. This option pertains, in our opinion,  to a smaller Ministry who has 10 or fewer Special Purpose Funds (SPFunds).  The usual QBs Income and Expense accounts are used for the General Purpose Fund only.

   CAUTION:  This Fund Acctg Method Two also does NOT permit QBs to combine the Ministry's Income and Expenditures (GPFund) and such activity within the QBs Equity accounts (SPFunds). The SPFund Bal Forward, Income and Expenditures transactions will likely have to be entered a second time.  Ask us at about producing a Excel doc from the SPFund Equity Accts activity for such a purpose. The Big Pix Sample. (97) above meets this overall reporting need as provided via an Excel driven report that combines the GPFund and the SPFunds overall operations at a Ministry. 

QBuxBox Method Three (11)  )-- This method is basically an alternative spending control system as you:

  •   Structure SPFunds as QBs Equity Accounts;
  •   Use QBs Classes for "reasons why SPFunds change" - see above SPFunds Class report as an example;
  •   Each DAG (Department) within the GPFund has its own QBs Equity Account;
  •   QBs Classes are used mostly for department expense line items;
  •   Not use the usual QBs Income and Expenses feature;
  •   Not use QBs Budget feature; go to  0002  for info what we call Receipt Assignment Acctg. Or the GPFund income is assigned upon receipt to each GPFund department; via sequential priority order where the Department can only spend money if receipts have been so assigned.  There are no 'Actual to Budget' reporting methods or issues per se under this Method Three since you spend only what is available per this Method's fund balance.  Ask us about using QBs Excel features for such purposes.
  •   See below for a sample status report (usually weekly) - go to 0002 for more details:
Acct Types Assets:      
Bank     Checking- Savings     $16,787 
Fixed Assets     Land Bldg & Equipment      
         Total Assets       $16,787 
Liabilities:      
Acct Pay         Payables       $  1,689 
Fund Balances - Net Assets:      
SPFunds      
Equity    Approved donor restrictions  $      700    
Equity    Building Fund  $    4,000    
Equity    SetASide for named purpose $  15, 774    
Equity ((Deficit) from last year $   (6,362)    
            Total SPFund    $ 14,112  
GPFunds