How to close a financial year & how to keep 'earmarked' funds

[Mike or Penny Novack]

On 5/25/2017 11:05 AM, Anita Graves wrote:
> I am astounded at the amount of help you dear people offer!  Thank you very much.
>
> ....... My only reason for wanting to ‘close’ the books was in order to properly carry forward any account balances.  In my case, I had some advanced fund balances in the expenses as subaccounts and was hoping there would be a ‘magical’ way to carry these balances forward, along with the balances forward in the asset, and equity accounts, but don’t think I know how to do that.
Stop right there.

I think you are mishandling how you are accounting for "dedicated 
donations" (what I would call "restricted donations"). Formally 
restricted donations are technically a liability, but you probably don't 
want to go there. And you probably don't have separate bank accounts for 
each fund. One (relatively) easy way to do this:

a) Make a parent for your bank account and make what is now your bank 
account a child of that, Then create child accounts for each special  
fund where the money is kept in your main bank account. You will be able 
to reconcile against the statements from your bank by looking at the 
parent total. You may have a little more work to do when entering a bank 
deposit if being new, you don't want to mess with transactions split on 
both sides (that's tricky). In that case, immediately after the deposit 
(split on the credit side) you enter a transaction to transfer that 
portion of the deposit that was restricted to the proper child(ren) so 
could be split debit  side.

b) Each time you pay an expense that qualifies for use of some 
restricted fund money you again have a little extra work. The actual 
check would be entered in the main bank account (debit the expense 
account) but also transfer back that amount from the restricted fund to 
the main account. Again, use two transactions if you find a two way 
split daunting.

c) The adjustments (transfers into and out of the restricted children) 
could be done periodically instead of as each happens. That is a "work 
flow" choice. In that case you would use the total for the period 
(quarter?) of "donations restricted building expenses" to transfer from 
main account to the "building expense fund" child and the period total 
of "building expenses" to transfer back from the "building expense fund" 
to main checking. use your judgement based on the volume of transactions.

This DOES carry over accounting periods since accounts of type asset, 
liability, and equity, are "standing" accounts.

Note that a Balance Sheet report will show your board what is the 
balance of each of these dedicated funds at any given point in time.

Michael