Non-profit / charity / fund accounting, example help, please

Wm wm+gnc at tarrcity.demon.co.uk
Sat Nov 29 11:02:47 EST 2014


Sat, 29 Nov 2014 09:57:46 <5479DEEA.6020702 at mtdata.com>  Mike or Penny 
Novack <stepbystepfarm at mtdata.com>

>> For people using gnc for personal or business accounting and 
>>wondering  what this is all about there is some apparent weirdness in 
>>this type  of accounting, for e.g. if someone gives you money it may 
>>be a  liability rather than an asset and other non-intuitive and 
>>entertaining stuff :)
>>
>Look, this is a perfect example of the problem not being with gnucash 
>but with understanding the fundamentals of accounting for your sort of 
>entity (mine too, I am the treasurer of non-profits and use gnucash for 
>the purpose).

So we should be working together rather than against each other.

>You are speaking of "restricted donations" of course. Well let's see if 
>we can't correct how you think about that.

There is no need for you to correct me, pal, to be honest I sometimes 
find your interventions unnecessary, saying things like that, however, 
means my postings need to be approved.  If the cost of that is that me 
calling you an arse in public *and* that is approved by a mod then you 
may want to back off.

>If you receive a restricted donation (can only be used for some 
>specified purpose) then it IS both an asset and a liability.

If the promise is made before the donation is received it is a liability 
with no matching asset. The promise is equity.  Many non-profits work on 
the expectation of funds.

>What it isn't, is currently available donation income. When you spend 
>some assets pay for an expense that the restricted funds were qualified 
>to be used for this purpose you can initially treat that normally 
>(credit checking, debit expense account).

Eh? Where does credit checking come into it? If you have dodgy promises 
that is your business not mine.

> Every so often, monthly, quarterly, or annually as you prefer* (or are 
>required by your jurisdiction) you can enter an adjustment transaction 
>whose amount would be the total for that period of this qualifying 
>expense -- debit the liability ("donor restricted funds") and credit 
>the special income account ("funds freed from restriction").

No.  Funds are freed for spending by decision not period or 
jurisdiction.

> OR, if your jurisdiction requires a different process then do whatever 
>that might be (I don't know UK regulations for non-profits).

You are missing the point big time.  My aim is generic.

>The point I am making is that NONE of that has anything to do with 
>gnucash.

You say that about everything though, i.e. your opinion appears to be 
that *everything* is nothing to do with gnucash, for that reason I am 
less interested in your opinion than I might otherwise be.

>Nor is special things like this limited to non-profits. Can't expect 
>the poor gnucash developers to be providing ACCOUNTING examples for 
>every possible sort of entity,

I'm not sure if you are being sarcastic or not.  I'm doing the work in 
this case and not expecting the gnucash developers to do anything extra.

> so they quite reasonably did just "personal" and "sole 
>proprietorships". Well partnerships have "weird things" like "drawing 
>accounts" under liabilities and corporations, well let's not go into 
>all the possible special things that might be required for things like 
>"treasury stock", etc.

Irrelevant to the issue at hand, just you sounding off again.

>Please, if you are trying to keep the books for something more 
>complicated than personal or sole proprietorship get yourself the 
>necessary accounting books or get professional accounting help.
>
>Michael D Novack, FLMI

Ah, I get it now, you want to get paid.  OK, the answer is, "no, I won't 
be paying you".  Would you please have the decency to take the issue 
non-personally or back off and allow other people to express themselves?

>* If you insist on keeping this current as you go (say your bylaws 
>require that or your oversight person requires that) you CAN do that 
>using a split transaction.

Reporting to people with oversight is ordinary, the orgs I'm working 
with don't need to hide spending from their trustees.  Quite the 
opposite, in fact, they like it when I get involved because I tell them 
where their money went!

>But this is messy, and you need to be careful as error prone.

Speak for yourself, not me

> I do something like this for one of my non-profits as we buy books, 
>some of which we give away and some of which we sell (and for the US I 
>need to be able to report "sales" and "cost of goods sold").

An example at last, yay!

> So when I enter a transaction recording the sale of a book I am 
>debiting cash and cost of goods sold and crediting sales and 
>unallocated books

Why unallocated books?  Is it because you don't use gnc for stock 
keeping purposes?

If my org gives something away that didn't cost it anything that isn't 
an expense though we might want to record volunteer hours, etc.

>(simpler when given away, then it's debit books donated and crediting 
>unallocated books).

OK

>In our case books are immediately expensed "unallocated", not an 
>inventory asset, as this is incidental to our main activities.

OK

> But like I said, entering two way split transactions is tricky.

I don't understand why you are doing something that you find tricky.

I expect this will be modded so you'll never see it, c'est la vie.

-- 
Wm...


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