Q: How to record a grant

[Damian Ivereigh]

On 04 Jun 2001 09:39:10 +1000, Ben Stanley wrote:
> <jalapeno> Here's a silly accounting question:
> <jalapeno> I'm the treasurer for a church...
> <jalapeno> Let's say I get a grant for $500.00 for a specific purpose
> <jalapeno> The money is deposited into the church bank account
> <jalapeno> It is spent in smaller transactions over the course of the
> following year or so
> <jalapeno> How do I keep track of it?
> <jalapeno> 1) open a new sub-account of the bank account? (makes it
> difficult to reconcile the bank account)
> <jalapeno> 2) create a new liability, started off by an amount equal to
> the grant. Deposit the grant money into the bank account. Spending the
> grant money reduces the liability.
> <jalapeno> I'm doing 2), but it means I have to check the balance of the
> 
> bank account against my liabilities every time I write a cheque...
> <jalapeno> But it does make it easy to reconcile the bank statements.
> :-)
> 
> If there is a better way of doing it, I'd like to hear it.
> 
> I'd be interested in any way of automatically showing
> assets - liabilities
> so that I can see at a glance how much money I really have in the
> bank... At the moment, I have to remember to check on the liabilities
> accounts before I write any cheques.
> 
> Note that I have 2 different bank accounts, and a liability tree for
> each one. When I say assets - liabilities, I mean that I must be able to
> 
> select the liabilites to offset against a particular bank account.
> 
> Ben.

I didn't see the original question, but...

I would say that option 2) is the right way to go. You have to go
through the checkbook anyway working out what each check is for. So as
you say everytime you write a check that is being paid for by the fund
you reduce the liability of the grant.

Of course if you track suppliers (i.e. you pay on invoice), then each
time an invoice comes in, you work out how much of that invoice is
against the grant and split the invoice between the general expenses
(non grant) and the grant and journal accordingly. Then when you pay the
invoice it just journals between the bank and the supplier.

If you want me to explain that better, let me know.

Damian

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Damian Ivereigh
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