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                            TO:  Interested Ministry/Church                                                                                            FROM: Jim Bramer, Retired Auditor-CPA
                                                                                                                                                                                    FILE:  0690-03/qbb

                            RE:  0601-06 Method 4 and Fiscal Year End Bal Forward Issues                                 Originated:   March 2006                                                  

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          Below is a hypothetical Online Email thread (THRD) between Jim@bcidot.org   and one of these Ministry MFTeam members: PAT (Ministry Executive), LEE (Ministry Volunteer Treasurer), and FRAN (Ministry Computer Bookkeeper).   

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From:  Fran  - 

    Hi, Jim, I set up QuickBooks last year for my church mainly to keep the checking account up to date and to be able to create monthly income and expenses reports.  After I set up "Designated Funds" as QB Classes accounts in the manner that Intuit recommends, it didn't dawn on me that when the year ended, QB would close out the following "Designated Funds" accounts that I had set up:  Missions Fund, Building Fund and Project #1. 
    Plus we have a "Self Funding Event #1" account where we have, in advance of the actual event, collected monies and paid certain expenses before our year end. In other words, this event will take place three weeks into our new year and I want these event transactions to straddle these two fiscal years. 
    I know the year end balances in those accounts, but I don't know how to get them appropriately in the QB system so I can carry them over to the new year and appropriately show activity in these Funds during the next year.  Can you help me? 

From:   Jim@bcidot.org 

        I think so, Fran.  Please take a look at the content within  0041  where we have set forth some explanation/perspective of what I call Special Purpose Funds - SPFunds  (plural) and the General Purpose Fund - GPFund  (singular).   With these aspects of Ministry Fund Accounting in mind, then please go to  0601  and notice how I have defined four methods by which a Church/Ministry can use  QuickBooks to do their needed Ministry Fund Accounting, etc.  
        Please also go to  3444  where  Brad  provides some information about portions of such SPFunds  pertaining to Self Funding Events that straddle two fiscal years, etc.
        After you have digested  0601  you will note that you have been using what I call 0601-06 Method Four. 

From:  Fran  - 

    Ah ha -- I indeed see that we are doing Church Fund Accounting somewhat like what you mention above and I also recognize your "Method Four" as we use QB Classes to account for our "Designated Funds" (you call them "Special Purpose Funds") here at the Church. Please note the columnarized report sample below that I get by using the QB Classes.     
    But what about the year end carry over issues?

From:  Jim

        Well first, you will remember that a significant Ministry/Church finance reporting objective is for the reader to know how much of the money on hand is spoken for (Special Purpose Funds) plus how much is available for this year's normal operations (General Purpose Fund).  Accordingly, I would encourage you to reflect these Designated Fund Balances (notice they are QB Equity Accounts) within the Church's monthly Balance Sheet throughout the year.  Please notice the sample Balance Sheet below:

				April 30,  2004
ASSETS
	Current Assets
		Checking/Savings
			1001 · ECCU Checking Account	9,670.00
		Total Checking/Savings		9,670.00
	Total Current Assets			9,670.00
	Fixed Assets
		1400 · See Excel Doc for List		125,025.00
		1999 · Fixed Asset Offset		-125,025.00
	Total Fixed Assets			0.00
TOTAL ASSETS				9,670.00
LIABILITIES & EQUITY
	Equity
		3800 · This Years Fund Balances
			3250 · Missions Fund Bal Now	775.00
			3450 · Bldg Fund Bal Now	5,123.00
			3500 · Project One Bal Now	500.00
			3966 · Self Funding #1 Bal Now	1,545.00
			3980 · GPFund Bal Now	1,727.00
		Total 3800 · This Years Fund Balances		9,670.00
		3900 · Previous Years		1,525.00
		3999 · Net Income Offset (Video)		-9,670.00
		Net Income		8,145.00
	Total Equity			9,670.00
TOTAL LIABILITIES & EQUITY				9,670.00

From:  Fran  - 

    Yes -- I have never been able to show information within QBooks like this and I certainly can see how valuable such a report would be to our Board and Staff.  I run QBooks reports when I filter using the QBooks Classes so I can get an operating report via QBooks that appears below as it shows me the ending balances of the General Fund and the Designated Funds as shown. 
    How do I get this info into the "Balance Sheet" per your example above?

		00-General Fund		01-Missions Fund		05-Bldg Fund		20-Project #2		33-SelfFund #1		TOTAL
	3900 · Previous Year	1,000.00		525.00		0.00		0.00		0.00		1,525.00
	4001 · Donations Income	222,177.00		25,000.00		5,123.00		1,000.00		0.00		253,300.00
	4050 · Self Funding Receipts	0.00		0.00		0.00		0.00		2,345.00		2,345.00
	5001 · Salaries and Benefits	-145,000.00		0.00		0.00		0.00		0.00		-145,000.00
	5020 · Missions Paid Outs	0.00		-24,750.00		0.00		0.00		0.00		-24,750.00
	5040 · Debt Retirement	-15,000.00		0.00		0.00		0.00		0.00		-15,000.00
	5050 · Ministry Supplies and Expense	-52,100.00		0.00		0.00		-500.00		-800.00		-53,400.00
	5060 · Facility Costs	-7,500.00		0.00		0.00		0.00		0.00		-7,500.00
	5999 · AllElse Expenditures	-1,850.00		0.00		0.00		0.00		0.00		-1,850.00
TOTAL		1,727.00		775.00		5,123.00		500.00		1,545.00		9,670.00

From:  Jim

        Basically, you get your Fund Balance information from the above filtered QB Class report and you make Journal Entries either weekly or monthly.  Of course, you can use the QB memorized report feature to reverse out the previous Journal Entries and then, in order to show the information within the above Balance Sheet example,  you post one that would look something like the following:

Nbr	Name	Debit	Credit		Class
3250	Mission Fund Bal Now		$   775.00		None
3450	Bldg Fund Bal Now		$5,123.00		"
3500	Project One Bal Now		$   500.00		"
3966	Self Funding #1 Bal Now		$1,545.00		"
3980	GPFund Bal Now		$1,727.00		"
3999	Net Income Offset	$9,670.00			"

From:  Fran  - 

    Wow --  that is pretty straight forward, Jim.
    Let's get back to my original questions about how to show a carry over balance forward in such accounts to the new year.

From Jim:

        I know you are anxious for us to talk about that, but I believe you will benefit by what follows: 
        Please notice in the sample May 03 - Apr 04 Income Statement below, that we have a 0001-Bal Fwd from Prev Year QB Income account.  While it is not really the new year's income per se, it serves the purpose of being able to show the Balance Forward from the previous year..... notice this process can or can not apply to the General Purpose Fund-GPFund.  Interestingly, some Ministries/Churches (per this example)  like to start the new year with a beginning balance in the the GPFund, but most prefer to start with a zero beginning balance in the GPFund each fiscal year.. 
        Which brings me to the next point -- let's suppose that the fiscal year for this Ministry/Church was 04-30-xxxx and their accumulated QB Net Income for all Funds as of 04-30-2004 is per the breakdown below:

			May 03 - Apr 04
	Income