QB Meth 4 Fiscal Yr - FundBalFwdAcctg - 0690-03 ZZqbb

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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                                                  


          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).   


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 yearCan 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?

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  
  0001 � Bal Fwd from Prev Year  $            1,525.00
  4001 � Donations Income  $        253,300.00
  4050 � Self Funding Receipts  $            2,345.00
Total Income  $        257,170.00
  Expense  
  5001 � Salaries and Benefits  $        145,000.00
  5020 � Missions Paid Outs  $          24,750.00
  5040 � Debt Retirement  $          15,000.00
  5050 � Ministry Supplies and Expense  $          53,400.00
  5060 � Facility Costs  $            7,500.00
  5999 � AllElse Expenditures  $            1,850.00
Total Expense  $        247,500.00
Net Income  $            9,670.00

        When the Ministry/Church begins their new fiscal year the above Net Income of $9,670.00 will automatically revert to the Retained Earnings in QuickBooks.  This means that your 1st monthly Journal Entries mentioned above for the new fiscal year will be changed this "Once a Year " time to 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   "
Retained Earnings  $9,670.00     "

    Some Ministries/Churches allocate some of the GPFund amount of $1,727.00 to its own QB Equity account (for example--- 3199 - Board Discretionary Available Balance) or they may distribute $1,000 thereto which leaves the remaining $727.00. 
    The ultimate result is as of 05-01-2004 you need to do the following "Once a Year"  necessary "In and Out" Journal Entry to order to set up the "3900 Prev Yr Bal Fwd" amounts as QB Class amounts.

Nbr Name  Debit   Credit    Class
         
3250 Mission Fund Bal Now    $   775.00   3900 Prev Yr Bal Fwd
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    $   727.00   "
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 $      727.00     "

From:  Fran  - 

    Wow --  this year end process is not as "straight forward" Jim, as the previously discussed Journal Entry process, but I am glad that you laid these foundations with me (we likely will do it at month end only, when our Board get financial reports) as it helps in doing this "Year End" process that I originally asked you about. 
    I will contact you if I have any questions.

From:  Jim

        Good ...... also please be aware, Fran, that I have a sample  QBPro2004  file that we can view together via the  0130   process. Or I can provide you with a copy or this sample by an Email attachment.        


--MINISTRY FINANCE "LINGO"  ABOVE  INCLUDES--   

Balance Sheet = Report showing Money Assets and who belongs to the Fund Bal Equities
Class = Feature of QuickBooks  (QBs)
Designated Fund =  see SPFunds below
Equity =  Section or area of QuickBooks (QBs)

Fiscal Year = 12 months, usually means other than calendar year
GPF = General Purpose Fund, or GPFund
Income Statement = Report of this year's QBs Income/Expense by type
Method One = Preferred way to use QB to do Ministry Fund Acctg
MFTeam = MFT, or Ministry Finance Team
Net Income = During the year difference between the QB Income and Expenses
QBs =QuickBooks, usually the latest version
Retained Earnings = QBs automatically post Net Income thereto 1st day of new year
SPF=Special Purpose Funds, or SPFunds

 


    The bulk of this Publication originated in March 2006 and was UPTD: March 09, 2012 .   Click here and go to List of threads (THRDs) at www.bcidot.org  

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