QB Year End Bal Fwd Acctg     0659-02   ZZqbb

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                               TO:  Interested Ministries                                                                    FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                  FILE: 0659-12/qbb

                               RE:  MUST BE ZERO Process - QB Yr End Bal Fwd Acctg         Originated:   May 2001


          Below is a hypothetical Online Email (EML) thread between any one of the following MFTeam members: PAT (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper) and  Jim@bcidot.org   


 FR: FRAN

        Things have gone well with the QuickBooks � (QB) Fund Accounting system per your recommended Method One during the past year, Jim , but how do I close out the books at the fiscal year end; especially how do I carry forward the balances of each SPFund?.

            FR: JIM

        Neat to hear from you, FRAN ..... was wondering how things (especially year end matters) were going. The first year end, FRAN.  of your using QB Method One and this QB Class Balance forward method can be a challenge as the fiscal year end effort covers such issues as: 

   a>   Handling QB "Opening Fund Balance", if any;
   b>   Handling QB  Retained Earnings (QB has another unique name for this now)  and, as you mentioned;
   c>   Properly carrying forward the balances of each SPFund - especially when you use the QB Class features.  

    1>  One of your beginning steps when you set up your QBs company was to go to the approprirate tab (I believe it says "COMPANY") and state that your fiscal year ends in April. 
           Let's suppose the Fund Balances as of April 30/xx were as follows:

SPFund 'A"

$ 300.00

SPFund 'B'

$1,000.00

SPFund-Prior Yr GPF Gain or (loss)

$ 33.34

This Year's GPFund (Overdraft or loss)

 (122.40)

Total

$1,210.94

        To remind you,  as indicated in 0601 ,  SPFund stands for Special Purpose Funds and GPFund stands for General Purpose Fund.

        2> Further let's suppose that your 'two digit ' Bal Fwd' QB Class is "00"; 'Income by types' are "3x"; 'Payroll by types' are "4x"; 'Operating expenses by types' are "5x"; and 'inter-fund (you do business which yourself, etc.), transactions are "6x".

        3> You will need to set up a new QB  "MUST BE ZERO" Current Liability account.

        4>  Let's suppose that you have made all of your regular monthly and year end 'clean up adjustments' ... including any Funds that you close out etc (via the transfer Class "6x" code, of course) .... and everyone is satisfied with the present 04-30-xx year end balances and the QB reports. You then process all of the reports as of 04-30-xx that you desire .... especially those related to the QB Classes. Since you are now totally finished with last year, you make a year end backup copy --- this must be done before you take the next steps. 
  
              Also discuss with me at JIm@bcidot.org the possibility of using the 04-29-xx for year end status and reporting and restricting 04-30--xx for just this MUST BE ZERO process.  There is also the possibility of also restricting the 05-01-xx date  for this overall process -- or your new fiscal year ( May xx)  transactions start with the 05-02-xx date, etc.


       5> Working from final printouts/reports, you then produce the following QB Journal Entry as of the end of your fiscal year, or dated 04-30-xx:

        Account Name

   Debit

  Credit

   Memo

   Class

Dated 04-30-xx

SPFund 'A'

$ 300.00

Yr End Offset

Leave Blank

SPFund 'B'

$1,000.00

Yr End Offset

Leave Blank

Prior GPFund  Balances

$ 33.34

Yr End Offset

Leave Blank

(1)Retained Earnings

$ 122.40

Yr End Offset

Leave Blank

MUST BE ZERO (QB Liab Acct)

$1,210.94

Yr End Offset

Leave Blank

    Leave the Class blank; it is no problems if reports show them as unclassified

                        

   (1)  The QBs software system may use a different account title than "Retained Earnings" but it means the same thing -- namely;  a QBs automatically generated account on the 1st day of the new fiscal year (05-01-xx) that represents the difference between the QBs Income and Expenses of the preceding year.  

        6>  Next, also as of 04-30-xx, you process and print out (as a year end reference report) a proof Balance Sheet .... this should clearly show the above 1,210.94 in the MUST BE ZERO QB Liability account area.

        7>  And,  I am supposing that you use the Method One (see 0601), you will notice the GPFund (QB Net Income) above shows a loss of $122.40.

        8> As of 05/01/xx (it is far cleaner to restrict this 05-01/xx date to this Bal fwd effort only  (go to  0637  for QB date info plus see the comments within the 4b above paragraph )  it is desirable to change your new year tranx to 05-02/xx and beyond, etc.),   you make the following offset Journal Entry.

Dated   05-01-xx

SPFund 'A'

$ 300.00

Yr End Offset

Class "00"

SPFund 'B'

$1,000.00

Yr End Offset

Class "00"

Prior GPFund Balances

$ 33.34

Yr End Offset

Class "00"

(z)This Year's GPF Deficit

      $122.40

Yr End Offset

Class "00"

MUST BE ZERO

$1,210.94

Yr End Offset

Leave Blank

       (z)  This will be a new QB Equity account since we suggest that you not combine with "Prior year GPFund Balances".  Some like the idea of having a single annual QB Equity Account for tracking the GPFund result for each of your fiscal years.  
 
            REMINDER:  The year end balance forward amounts are carried forward to the new year for each SPFund.    Use of the above "00" Balance Forward QB Class identification allows you to show what you started with for this new year.   Of course, other QB Class accounts during the year help you identify why the SPFunds changed during this time and ultimately provides proof (see 9> report below) to the ending SPFund balance that appear within the Balance Sheet, etc.   This report, in essence is ultimately the overall Video (Income Statement) for only "Special Purpose Fund-SPFund" activity, etc..

          9> You then will process and print out as of 05-01-xx proof reports for reference....

                  -->   An overall Balance Sheet  (Photo)  (see 0799 for a list of QB Samples)
         `        -->   A SPFund Income Statement (Video) Class report (see 0704 for a Sample) which shows only the Balance Forward Class "00" amount.

         10>   Please discuss with us the desirability of running a detailed transaction report that shows all transactions dated 04-30-xx and 05-01-xx

          11) Then proceed with your new year (see caution within 10> above re  restricted use of the 04-30-xx and 05-01-xx dates)  in the normal fashion.

     FR: FRAN (1)

                  But we want the above $122.40 GPFund overdraft amount to show up in the GPFund activity of the new year.  How do we do that?

                            FR: Jim

        We do NOT recommend that you do that.  The GPFund QBooks accounting area covers only the current year's Income and Expenditure activity as reflected by the QBs Income and Expense type accounts.
        Let's suppose that the SPFund "A"  $300.00 is comprised of unspent donor designations and the SPFund "B" balance of $1,000.00  is a result of charges made to the GPFund during past few years.  Or it was a part of a SetASide process - see  0088  for details..    Remember ... the SPFund area is composed of two segments:

a>  The donor restriction/designations (SPFund "A") and
b>  That which is Board discretionary (SPFund "B" plus all of the prior year GPFund balances --  the $33.34 and $(122.40).
       

FR: FRAN

        Thank you, Jim, I will see if this makes sense, but probably the first year in doing this I will probably need to make full use of the  www.gotomypc.com  process whereby we both look at our set of QBooks and go through much of this process together.    Also either of us can reference the Sample (see 0079 )  as this allows you to see examples of this and other needed QB processes.  Of course, we can always process a QB report into a Excel doc and send it via Email.  

FR: Jim

           The first year end, FRAN.  of your using QB Method One and this QB Class Balance forward method can be a challenge.    Let's also discuss when you do NOT have a lot of Calendar year concerns (like when you outsource your payroll to QB/Intuit, etc.), a possible way, for a variety of good reasons, is to begin the year with a new QuickBooks � (QB) company.  It is quite straight forward to export Chart of Accts etc from the old and import to the new.  Let me know if this seems desirable.  Please contact me at  Jim@bcidot.org if you have any questions on this topic.


      Please Click here for more topics having to do with the use of "QuickBooks and Ministry Fund Accounting"  on www.bcidot.org  Uptd:  April 10, 2012     Click here and go to List of threads (THRDs) .

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