QB & Fund Acctg Method One -- 0622-02 ZZqbb

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                    TO:  Interested Onliners                                                                                                                 FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                                                  FILE:  0622-02/qbb

                    RE:  QB & Fund Acctg via Method One                                                                                      Originated:  August 2000                    


     Below is a transcript of another hypothetical Online conversation, or THRD WRITING, between  Jim@bcidot.org  and M)inistry F)inance Team - MFTeam members Pat .. the Ministry Executive, LEE .. the Volunteer Board Treasurer, and FRAN .. the Ministry Computer Bookkeeper.  Click here and go to List of threads (THRDs) at www.bcidot.org


From Fran:

    Hi, Jim, I have read a number of your messages on the QB Forum and several of your  www.bcidot.org web site pages. I am helping to set up QuickBooks (TM) (QB)  within a nonprofit for a non-accountant to administer.  Your pages suggest the use of QB Equity accounts to best accomplish fund accounting while the QuickBooks (TM) (QB) online help suggests classes. Your method sounds more sophisticated, but perhaps it is more complex. Please provide more of your thoughts along these lines.

From: Jim:

    Yes, as explained more in depth within 0601 and related links, I am a  Method One  advocate .... but both QB methods work. Some of the issues from my perspective include:

  •   A Non Profit accepts Special Purpose funds - SPFunds  that, obviously, are to be spent for the agreed indicated purposes.

  •   The current balances within each SPFund plus the General Purpose - GPFund, and their integrity, therefore is the primary finance knowledge objective.

  •    Why such money comes in or goes out of such funds seemingly is the secondary finance knowledge objective.

        With that in mind, the acctg system should facilitate such need priority and, right after posting an accounting transaction, the system must efficiently and timely provide such financial facts for those who should know.  Thus the following  Method One  Scenario - - - 


>>>  Let's suppose that there are two SPFunds plus the GPFund. Under recommended  "Method One",  whereby the QB Equity accts are used for SPFunds, the following would show up via either the produced Balance Sheet report,  or even mostly within the QB Chart of Acct list itself:

Common Bank Bal

$4,000.00

SPFund #1

$1,750.00

SPFund #2

$2,400.00

Net Income or  GPFund (Deficit)

$ (150.00)

Total

$4,000.00

---  A  Method Four   Balance Sheet would show the following:

Common Bank Bal

$4,000.00

Retained Earnings

$1,000.00

Net Income

$3,000.00

Total

$4,000.00

>>>   The only way to know who belongs to the this $4,000.00 via the Method Four   is to use QB classes so that you can produce a report something like the following:

QB SPF Classes

SPFund#1

SPFund#2

GPFund

Total

1st of Yr Beg Bal

$ 500.00

$ 400.00

$ 100.00

$1,000.00

   Donations Income

$2,500.00

$3,500.00

$1,000.00

$7,000.00

   All Expenditures

$1,250.00

$1,500.00

$1,250.00

$4,000.00

Net Income

$1,250.00

$2,000.00

$ (250.00)

$3,000.00

FYE - End Bal

$1,750.00

$2,400.00

$ (150.00)

$4,000.00

>>>   Via Method One you use QB classes to produce a report of why all of the  SPFund(s) changed ..... see below for a sample.  Or you can do a single SPF or a selected SPF group.

SPF-1st of Yr Bal Fwd

$900.00

SPF-Donations Income

$6,000.00

SPF-ll Expenditures

$2,750.00

Net Income

$3,250.00

SPF FYE - End Bal

$4,150.00


    >>>  Management MUST know that the GPFund is operating at a deficit and has borrowed $150.00 from the SPFunds  ---- Method One readily provides this vital info.
    >>>  Via the fund accounting system, expenditures need to be shown (a result of reducing the bank account or the effect of buying something) with an immediate Fund Balance reporting emphasis, but the acctg system MUST also provide Expenditure reason info.
    >>>  Donation Deposits can be added to the Bank acct and be posted within the acctg system with an immediate Fund reporting emphasis, but also with applicable Donation info.
    >>>  The accounting system needs to provide both the amount of Fund Balance and also "why the fund changes" information; but Fund Balance status is in the
immediate foreground.  The reasons "why the fund changes" info (the above donation and expenditures) are vital, but can be in the immediate background.


    Please click here and view those Onliners that we have helped presently using QB   Method One  . Contact us at  Jim@bcidot.org   if you need more info.

            From Fran:

    Let me 'dig' into all of this as I think you have sufficiently answered by QB Method One questions.


      Please Click here for more topics having to do with the use of "QuickBooks and Ministry Fund Accounting"  on www.bcidot.org.  The bulk of this Publication originated in August 2000 and was  UPTD: March 09, 2012    

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