[GNC] Fund management without an actual account
Chris Skudder
CSkudder at earthlink.net
Tue Aug 6 17:20:12 EDT 2024
Hi Daniel,
I apologize if this is a duplicate - I sent it yesterday, but I didn't
see it show up in the subsequent emails.
This is similar to the "liability" approach. But it works better in my
case because all the numbers I (and others) want to see are grouped
together in the assets section of the balance sheet (statement of
position, in non-profit vocabulary).
As Treasurer of our church, I do something very similar.
This is how it works:
- A parent asset acct 1120 is called "Checking acct after reserves"
- a child acct 1121 is called "Checking acct"
- another child acct 1122 called "Reserve for property tax"
- another child acct 1123 called "Reserve for elevator maintenance"
(I think some people might call these 2 Reserve accounts
"contra-asset" acct's since they normally have a NEGATIVE balance as an
asset)
In the church's case, the reserves are for:
- property tax on the parsonage, which is due every 6 months
- big elevator maintenance work required every 5 years
The acct codes (1120, 1121, etc) help a LOT to keep this clear in the
chart of accts. I'd suggest using acct codes for all accts. See for example:
double-entry-bookkeeping.com/coa/chart-of-accounts-numbering-system/
... or search on "typical chart of accounts numbering system"
Then I take the property tax amount divided by 6 months, and
the estimated elevator maintenance bill divided by 60 months ie 5 years -
... and set up monthly Scheduled Transactions, which:
- CREDIT the "Reserve for something" acct
- DEBIT the appropriate expense acct
... for the amount needed monthly, to have money available to
pay these bills when they come up.
So the "Reserve for something" accounts -which are asset accts- usually
have a negative (credit) balance. This is the amount which has been "set
aside" towards the known upcoming expense.
The expense actually shows up monthly, instead of a big lump at 6 months
for property tax, or at 5 years for the elevator maintenance.
When the "big lump" bill comes due and I pay it, the transaction is:
- CREDIT the checking acct, from which I write the check to pay it,
- DEBIT "Reserve for something" ... which brings the "Reserve" acct
balance back to zero (or pretty close).
Note that this debit does NOT go into the expense acct - because the
expense has already been booked monthly.
So looking at these acct balances in a typical month, it might look like
this:
1120 "Checking acct after reserves" = $6,000 (PARENT)
- 1121 child acct "Checking acct" = $7,250
- 1122 child acct "Reserve for elevator" = -$1000 (Negative balance)
- 1123 child acct "Resv for property tax" = -$250(Negative balance)
What this means:
- 1120 the PARENT "Checking after reserves" is that portion of the
checking acct available for everything else ... AFTER what's been set
aside for the next 5-year elevator maintenance and the next 6-month
property tax payment.
-- 1121 child "Ckg acct" is the ACTUAL amount in the checking acct.
... This is the acct into which I book all deposits and checks
written; and which I reconcile with the bank's statement each month.
-- 1122+1123 "Reserve for XXX" acct's are the amounts "saved up
for" the upcoming big-lump payments, which show up as a negative number.
I coded 1120 "Checking after reserves" as a "placeholder" acct, so it
does NOT show up as a choice when I'm entering transactions. I will not
ever normally enter a transaction directly into this acct.
Everything goes into the actual checking acct 1121, or the reserve
acct's 1122 + 1123.
Hope that helps and God bless!
Chris
------------------------------------------------------------------------
On 8/5/24 12:00, gnucash-user-request at gnucash.org wrote:
> Message: 3 Date: Mon, 5 Aug 2024 13:27:22 +1200 From: Daniel Sheffield
> <d.j.yotta at gmail.com> To: gnucash-user at gnucash.org Subject: [GNC] Fund
> management without an actual account Message-ID:
> <CAGBFyFUc8nZAFzAbyTWcUWc3QmgRNvJEeBp=HSJz-7A6_Y+8ZQ at mail.gmail.com>
> Content-Type: text/plain; charset="UTF-8" Hi, I'm using gnucash to
> manage my personal finances. ... BUT I'm trying to keep track of
> savings towards a goal, but without opening an actual account or
> making any real world transactions to achieve it. ... Cheers, Daniel S
On 8/6/24 12:00, gnucash-user-request at gnucash.org wrote:
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> digest..." Today's Topics: 1. Re: Fwd: Fund management without an
> actual account (Alan Johnson)
> ----------------------------------------------------------------------
> Message: 1 Date: Tue, 6 Aug 2024 09:54:08 -0600 (MDT) From: Alan
> Johnson <alan at argentwolf.org> To: Daniel Sheffield
> <d.j.yotta at gmail.com> Cc: gnucash-user at gnucash.org Subject: Re: [GNC]
> Fwd: Fund management without an actual account Message-ID:
> <3e05dd08-36c6-4dc4-b7e3-91bbcc0ae7f4 at argentwolf.org> Content-Type:
> text/plain; charset=UTF-8 I guess I don't understand what you mean by
> offset your mortgage. For the other things, things such as gifts and
> tithes, they would go into a liability account against the expense
> category you choose for them. When you pay / make the gift, you would
> transfer from your assett account (checking, savings, etc) to the
> liability account to zero it out. The assett (cash) and liability
> (gift, tithe, etc) would appear opposite each other on reports. Aug 6,
> 2024 03:20:24 Daniel Sheffield <d.j.yotta at gmail.com>:
>> Thanks Alan, I wonder about the roll up figure on the accounts tab -
>> I have heaps of future transactions scheduled months in advance to
>> help me forecast. But that means the account tab never reflects the
>> current balance. So I can't use that to reconcile. Unless there is a
>> setting somewhere to show up to today only on the accounts tab? I
>> also wonder about obligatory fund (ie, promised gift, allowance) -
>> the 2nd Tithe is a big deal for me, I view it as a liability because
>> I can not spend it on just anything I like. It's essentially on loan
>> to pay a bill in the future. Most people stick it in an external
>> account. I'm not doing that so that I can offset my mortgage. In a
>> nut shell, I really can't have it factor into my net worth because
>> it's not my money. Sort of like if you paid without?taxes
>> withheld?and will have to pay at the end of the year. Every time you
>> get paid, you're increasing your tax liabilities. The other funds,
>> this notion is not so important, I can scrap the travel money to pay
>> the bills if I want - so your way could work for that... but if I can
>> find one way that works, that's even better. But sub accounts on my
>> checking account seems to be the prevailing view... probably for a
>> reason... perhaps I should try harder... Cheers, Daniel? -- In the
>> beginning Kibo created the Internet. Now the Internet was formless,
>> and empty. Randomness was upon the face of computing, and the Spirit
>> of ARPA moved upon the face of the computers. Then Kibo said, "Let
>> there be data": and there was data. Kibo saw the data, and it was
>> good, so Kibo divided the data from the randomness, and Kibo named
>> the data Information, and the randomness Clueless. And the
>> Information and the Clueless were the first Network. On Tue, Aug 6,
>> 2024 at 5:24?PM Alan Johnson via gnucash-user
>> <gnucash-user at gnucash.org> wrote:
>>> Daniel, I would suggest that you use the second savings account and
>>> it would help with the over spending. I think it would look
>>> something like this, please forgive formatting as I'm on mobile, but
>>> you should get the idea. Checking debit 10k / salary credit 10k
>>> Credit checking 1k / debit savings2 1k Credit savings2 500 / debit
>>> vacationfund [subaccount] 500 Credit savings2 500 / debit toyfund
>>> [subaccount] 500 Need money back in checking to spend? Debit
>>> savings2 300 / credit vacationfund 100 credit toyfund 200 Credit
>>> savings2 300 / debit checking 300 Your roll up of savings 2 in the
>>> accounts list will tell you the amount which should match the
>>> savings statement. There should also, in theory, be a very few
>>> transactions to reconcile, and it keeps the checking account clean.
>>> Alan _______________________________________________ gnucash-user
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