Earmarking funds for specific purposes

[Aaron Laws]

On Mon, Nov 28, 2016 at 4:35 PM, Mike or Penny Novack <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
>

Thank you again.