[GNC] How to record 'balancing' trnsactions?

[David Cousens]

Chris,

The normal transaction when you receive funds into an account set of books will
be an increase in an Income revenue account (credit) and a debit to a bank
(asset) account. When you withdraw the funds to transfer them to the other set
of books you have to reverse both these transaction (suitable annotated) and
then make corresponding entries to receive the funds in the set of books which
holds the account you are transferring it to.

To make it clear I would create an  Income/Revenue sub account against which to
record the funds received which are to be transferred to the other account in
the other set of books.  When you receive the funds you credit this account and
debit the bank account. When you transfer the funds to the other account debit
the income account and credit the asset account. In the other set of books debit
the bank account and credit the appropriate Income/revenue account in that
second set of books. 

This also gives some record that you have transferred all the appropriate funds
to the other set of accounts as the balance of that Interest sub account should
be zero. Another alternative would be to credit the main Income account when
receiving the funds and have a sub account which is a contra account (sub
account with only reversed entries) which you debit when you transfer the funds
to the second set of books with corresponding credit to the bank account.

You could also have a corresponding sub-account of the bank account which you
would debit on receiving the funds for the other set of books and credit on
transfer of the funds to the other set of books. GnuCash can reconcile an
account and its sub-accounts (an option in the reconciliation dialogue).

Main thing will be clear annotation of the corresponding transactions so their
purpose is clear.

The only other consideration will be any regulations for non-profits which may
affect how you can record such transactions. Only an accountant in your
jurisdiction can advise you. Anything here is of course generic and not adjusted
for any regulations you may need to follow.

David Cousens


On Wed, 2023-07-12 at 22:13 +0100, Chris Green wrote:
> On Wed, Jul 12, 2023 at 04:56:23PM -0400, Michael or Penny Novack wrote:
> > On 7/12/2023 8:12 AM, Chris Green wrote:
> > > This is as much an accounting question as a GnuCash one but how one
> > > does this depends on the sofware's capabilities so it makes sense
> > > to ask here.
> > > 
> > > Our church has two main accounts (as in places where money is kept), a
> > > current account at a bank, and a 'building fund' kept in a building
> > > society savings account.
> > > 
> > > I run two separate instances of GnuCash, one for the current account
> > > and one for the building fund.  Both of these are run on a 'cash
> > > accounting' basis so the balances in GnuCash exactly match the
> > > statements from the bank and building society.
> > 
> > Let's assume that there is a good reason to have separate books << I can 
> > think of a number* -- keep in mind that I was treasurer of several 
> > organizations >> In other words, there might be no good reason for this 
> > church but might for another.
> > 
> > a) Yes, there can be errors going between the books. So you want to 
> > minimize the number of between the books transactions. See if there 
> > could be a transfer only of "net" every so often
> > 
> > b) You will need to use some thought for the accounts you will want to 
> > contain parts of transactions that pertain to the other entity.
> > 
> > 
> > Michael D Novack
> > 
> > 
> > 
> > * For example, a quasi independent org/fund is legally under a parent 
> > 501(3)3. The treasurer of the org/fund has to report certain things to 
> > the treasurer of the 501(c)3 and there may actually also be money 
> > transferred between them (they may be collecting money on each other's 
> > behalf and making payments on each other's behalf. But do you not see 
> > that no matter how many such transactions in a month need only one money 
> > transfer between them and one report per month (assuming getting things 
> > right between these entities once a month)
> > 
> Thank you, you have described the issue exactly! :-)
> 
> It's your b) that prompted me to ask the question, do you (or anyone)
> have any good insights into how to handle this?  Whether or not this
> is done with only one GnuCash instance or with two the difficulty is
> still there as I see it.
>