ACCOUNTING practice question

[Cam Ellison]

Lewis Overton wrote:
> I keep the books for a small nonprofit community band. We buy music
> periodically which I've been recording directly as Net Operating Asset. That
> doesn't tell me how much has been spent year-to-date, however, and I would
> like to know.
> 
> When I closed the books at year end, I didn't move the Music asset account
> to Equity. That might have done it, since the asset showing would be year to
> date.
> 
> On the other hand, that wouldn't put the amount we spent into expenses. I
> could fix that by creating an expense account for Music, then doing a
> transfer to assets at year end. I don't see any such account (exactly) in
> the UCOA account tree.
> 
> What's a good way to approach this problem?

I'm just retiring from my two-year stint as Treasurer of a paddle club. 
  We own boats - outrigger and conventional canoes, and a dragon boat - 
not to mention all the equipment that goes along with that.  These 
things are always shown as Assets: Capital Expenditures.  We show 
Depreciation as an Expense, though I don't think that will apply to you. 
  When you do your year-end, do a year-over-year comparison to show the 
change in Music assets, if you need to.

I think you need to ask yourself what question putting Music in Expenses 
answers, and whether that's the only answer (or the best question). 
Expenses is mostly for consumables, like manuscript paper and pencils, 
not for things that are intended to last.

HTH

Cam



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