Restricted Account Balance at Yr End

I have done church bookkeeping over 20 years but this is the first year with a new software.

We have several "temporary restricted" accounts for things like retreats.

Our last fiscal year just ended and a few of our accounts have a positive balance (in one case the retreat is this first month of the new fiscal year so monies were collected the prior month). In my old software (Shelby), I simply journaled the monies at fiscal yr end to carry the balance forward into those same accounts for the new fiscal year.

I'm with a new software now (Aplos) and have been told by them that this is incorrect and those accounts should zero out each year. In the past I have always done this as these accounts are not part of the General Fund balance.

Thoughts?

Comments for Restricted Account Balance at Yr End

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Using Aplos Tags
by: Vickey

I use Aplos for my church and many of my bookkeeping clients.

Victoria is spot on with her explanation, so I will just add some more on how it applies to Aplos =)

First of all let me clarify that only donors can "restrict" funds, so the retreat sounds more like a "designated" fund, so I would apply all of the income and expenses related to the retreat to the General or Unrestricted Fund (whatever you have it titled in Aplos) and the appropriate income and expense accounts.

I would also set up a "tag" for each "temporary" restricted or designated account/event/fund. Here is where Aplos really shines!

Once you have the tag set up you can run a tag report for any time period or "all dates" and see all of the transactions and the balance.

Many like to set up a "Fund" for temp accounts/funds/events, but I strongly discourage that practice as of the time of this post...you cannot delete or even make a FUND inactive in Aplos.

One last thing, not sure who told you that those accounts should zero out each year, but that is not correct.

If you are on a cash basis and mainly tacking for internal reports...JUST using the tag feature is probably your best option, but if you are using the accrual method and GAAP, you will need to research further on setting up an "unearned income" account for situations such as you described in your example.
Restricted Funds
by: Victoria

First, I don't use Aplos but it sounds like what you are talking about is an income or expense account. These accounts are temporary they reset at the beginning of every year and they are supposed too.

There should be an Equity, Fund Balance or Net Asset account associated with every Income or Expense account.

I'll use the term Fund Balance because it is plain English. A Fund Balance is just that the Balance of a specific Fund (example: Retreat). This account is where all income is added, and all expenses deducted leaving you with....

You guessed it! The Fund's Balance!!!
Equity and Net Assets mean the same thing as Fund Balance in CPA speak.

There are different ways to decease or increase a Fund Balance account and the software will handle that part as long as you following correct procedures. Older software packages did require an End of Year transaction to do what a modern account software program should be handling automatically.

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