Earmarking funds for specific purposes

[Mike or Penny Novack]

On 11/28/2016 2:34 PM, Aaron Laws wrote:
> On Sun, Nov 27, 2016 at 11:33 AM, Mike or Penny Novack 
> <mpnovack at mtdata.com <mailto:mpnovack at mtdata.com>> wrote:
OK, the main thing to understand, is that when dealing with 
restricted/earmarked funds you are doing TWO (somewhat separate things). 
You are accounting for the normal part of the transactions (money came 
in, got deposited, checks were written for some expense, etc,) AND 
accounting for the placement and removal of restrictions.

If an organization asks for "special donations so we can get a van to 
pick up food from a central warehouse to ring to the soup kitchens, the 
donations that come in sort of aren't the organizations until they get 
used for the defined purpose. That is what the "donations released from 
restriction" income account would be for,

If it is just you-deciding to earmark funds in your personal books, that 
set aside and later use is a bit different, and why I say "use the 
informal method"  << the later transfer will NOT affect any income or 
expense accounts >>

Don't try to "elide" the transaction, because you are really accounting 
for different things. OK to do it as a single transaction (a two sided 
split) but if you have to ask how, don't try to do that.

Michael