Creating a budget

[David Stibbe]

> A "budget" is a PLAN, a projection over time of what you expect. A typical
> accounting system like GnuCash has provision for you to be able to have a
> budget and report on it. But the actual transactions over time might not
> agree with the budget, might be over or under. Equally typical in
> accounting/bookkeeping is wanting to indicate and track funds that have been
> set aside for some purpose, often called "reserve funds". You gave an
> example, the reserve you are building for the purchase of a TV.

Ah, ok, so I should refer to them as "reserve funds/accounts".

>
> In a very large financial entity, reserve funds might even have their own
> bank accounts but that isn't likely at the scale of entity using GnuCash (or
> any other "package" -- an entity that large might have a custom system
> written by its own IT department). So how do we do this with GnuCash? It's
> not hard. Under our bank account we create child accounts, one for each of
> the reserve funds. In my case I find it useful to also have a child for
> "unreserved funds" and treat that as how much available in the bank.
>
> In other words, now the total for the parent "bank account" will match what
> the bank says that you have in the account (what you reconcile to) but each
> of the child accounts shows what you have in that reserve or unreserved.

Ok, so it would be like :

Bank  - 1095,-
Bank / Unreserved Funds - 810,-
Bank / Reserved Television - 285,-

Then I would have another question:

the above is only shown in the 'accounts' window. However, this window
shows the totals for all accounts;  which also includes future
transactions like tax-payments you know will take place ( which I have
Gnucash create a month in advance). How can I see the *current* state
of accounts in the 'accounts' window, so 'Bank' will truly " match
what the bank says that you have in the account " ?


> comes the accounting for when you use reserve funds for their intended
> purpose. In my case I want to make reconciling checks easy so actually done
> against the "regular" bank account (unreserved) and then quarterly or even
> just annually would enter a transfer transaction (reserve to regular) to
> indicate that reserve finds were used for their intended purpose. But you
> might want to do that as you go along. (our situation is different -- I'm
> doing organizational accounting for a 501c3 and the reserve accounts are for
> donations restricted as to purpose. So in my case a periodic adjustment
> makes more sense -- simply take the total of expenses that qualify according
> to the restriction on the fund and transfer that much instead of individual
> adjustments for each item. For example, imagine for a moment that you were
> an organization whose purpose was to aid schools and you had funds reserved
> for computers, books, AV materials, etc. Instead of transferring for each
> item you would wait till before each quarterly report and then transfer the
> total for computers, the total for books, etc. On the other hand, you are
> more likely doing this for single large items and so might as well adjust as
> you go along.

I had to investigate what "501c3" was...  Apparently it is a code for
an American organization that meets certain requirements.

I've just been using gnucash for a short while, and each day I'm
learning something new...


David