Reduction of expense or revenue?

by Linda
(Houston, TX)

Can I record funds raised or donated for a mission trip as reduction of expense rather than income?

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Reduction of expense or revenue?
by: Anonymous - MN

Vickie has a very wise response. I have actually set up a number of budgeted items the Vickie describes using Quickbook Online. I use this method in tracking AWANA expenses and income, Youth activities and the funds that the youth contribute toward the activity, ... Then you can see just how much the Church is supporting some of your activities and how self supporting they are.
Set up a Triplet Account
by: Vickey

I agree with Anonymous - MN and I would do it using a triplet account...if using QBO or something similar.

A wise CPA taught me how to set up and use triplet accounts. You set up an expense Parent account and title it something like "Mission Trip".

Then you build 2 sub expense accounts and title one "MT Donations" and the other "MT Expenses".

Apply the transactions accordingly.

That method may not work in all accounting software, but in QuickBooks it works well...because you can collapse those 2 subs into the Parent when you run reports and just see the net amount.

What is great about this method is that you can see the details on how much came in and how much went out in the expanded view.
Reduction of expense or revenue?
by: Anonymous - MN

I would handle as a reduction of expense so that your actual income does not get skewed out of what it actually is.

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