[GNC] Tracking designated balances in the total checking account balance?

[Michael or Penny Novack]

On 1/9/2020 8:09 AM, briancady413--- via gnucash-user wrote:
>   I have this same question - How to keep distinct funds within a checking account balance. Or is there a better-accounting way to do this?
> Brian-
>
>   

THAT is where you are going wrong (making it hard), trying to do it 
WITHIN the checking account itself.

There are a couple ways of accounting for restricted/dedicated funds. 
Having such funds is a common situation for non-profits. If somebody 
gives the organization money "toward a new computer" (or whatever) while 
the organization gets to deposit that check now it isn't REALLY the 
organization's money till used for the designated purpose.

You really need to read something on "accounting for the non-profit". I 
will describe ONE way of doing it (that will cause no change to 
reconciling the checking account). But which way of doing this really 
depends on the formality of the restriction and the frequency of 
qualifying expenses.

So ..... let's suppose we will be collecting funds for a while dedicated 
to a major project and formally restricted << if the project abandoned, 
need to return the money or get from each donor a release >> Could do 
this with a liability account named something like "Project A Fund". 
When a donation for this fund comes in, debit checking and credit this 
liability. Also create an account under income "Restricted Funds Used". 
OK, now say the time has come to use those funds. In other words, there 
is an expense that qualifies (is for that purpose of A). Can write the 
check normally, debit the expense and credit checking. But not done yet. 
Also enter a transaction debiting "Project A Fund" and crediting 
"Restricted Funds Used" << if you are very experienced with splits, 
could do in one transaction BUT entering two way splits is tricky >>

But you say, going to be a lot of extra work because instead of saving 
up for one big project this is something ongoing with frequent 
qualifying expenses. Do I have to enter all of these twice? No, you 
might choose a different approach. Let's say there is a "Flower Fund" to 
pay for flowers in front of the altar. Create in the expense account 
"flowers" a child for each quarter. Every week, debit this for the 
flowers bought (the one in the right quarter) and credit checking. Then 
at the end of the quarter, enter just one transaction in the amount of 
the quarter total debiting the liability "Flower Fund" and crediting the 
income account "restricted funds released".

Michael D Novack