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                               TO:  Interested Ministries                                                                                                             FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                                                            FILE: 0659-02/qbb

                               RE:  QB Yr End Bal Fwd Acctg per Method One                                                                      Originated:   May 2001

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   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   

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 FR: FRAN

        Things have gone well with the QuickBooks ™ (QB) Fund Accounting system, 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. 
        A way is for the two of us to send a QB Sample back and forth (see 0079 )  as this allows you to see examples of this and other needed QB processes.
        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.  
        Otherwise, the fiscal year end effort covers such issues as:  a>   handling 'orphan'  QB "Opening Fund Balance", if any; b> handling QB Retained Earnings at year end, and, as you mentioned; c> properly carrying forward the balances of each fund - with QB classes in mind.  

    1> Let's suppose the Fund Balances as of 09/30/xxx7 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 'Bal Fwd' QB Class is "00"; 'Income by types' are "3x"; 'Payroll by types' are "4x"; 'Operating expenses by types' are "5x"; and 'Cross,' or inter-fund, transactions are "6x".
        3> You will need to set up a new QB Current Liability accounts and call it "MUST BE ZERO"
        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 09/30/xxx7 year end and the QB reports. You then process all of the reports as of 09/30/xxx7 that you desire .... especially those related to the QB Classes. Since you are now totally finished with last year, you first make a year end backup copy --- this must be done before you take the next steps.
        5> Working from final printouts/reports from the above processes, you then produce the following QB Journal Entry as of September 30, xxx7:

Account Name		Debit	Credit	Memo		Class
Dated September 30, XXX7
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
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

        6>  Next, also as of 09/30/XXX7, 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 10/01/xxx7 (it is far cleaner to restrict this 10/01/xxx7 date to this Bal fwd effort only ...go to  0637  for for QB date info.....it is desirable to change your new year tranx to 10/02/xxx7 and beyond, etc.),   you make the following offset Journal Entry.

Dated October 1, XXX7
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 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 as 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. 

        9> You then will process and print out as of 10/01/xxx7 reports for reference ....
        --> A proof Balance Sheet (see 0799 for a list of QB Samples)
`       --> A proof Video Class report (see 0704) for a Sample Class Proof) which shows only the Balance Forward Class "00" amount.

        10) Then proceed with your new year 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.
        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:

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

FR: FRAN

        Thank you, Jim, will see if this makes sense, but probably will need to to exchange a sample file via www.gotomypc.com that often suggest above.

FR: Jim

           Please contact me at  Jim@bcidot.org   if anyone has any questions on this topic.

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      Please Click here for more topics having to do with the use of "QuickBooks and Ministry Fund Accounting"  on www.bcidot.org.   Uptd:  April 30, 2008     Click here and go to List of threads (THRDs) .

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      (1) An Online document, or WRIT (Writing), may be applicable to all Ministries, or it may be designed for just groups like: Evangelical Church, School, Missionary Agency or Organization, Christian Camp / Conference, or other named group.
      (2) WRIT formats include the perspective of   Jim@bcidot.org   via IOMs (Inter-Office Memos) to the Ministry Finance Team (MFTeam); THRDs, a hypothetical Online conversation with members of the MFTeam; GLEANINGS, or Scripture within context of the MFTeam; FWIW; A periodic editorial (For What it is Worth); TRUISM, or believed Ministry Finance principles; and FAQ, response to Frequently Asked Questions

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