Using Classes when Inputting Beginning Balances
With many churches and nonprofits starting a new fiscal year on July 1, I often get questions regarding entering the beginning balances for a new accounting system. If you are using QuickBooks, it is important to get the classes correct with these beginning balances. Earlier this year, I wrote up the following for Vickey Boatright of Freechurchaccounting.com to help her readers. I'm posting it here in hopes it will be helpful to anyone setting up their system in July.
Using the
Class function is necessary in QuickBooks to track funds and programs.You should set up each the programs you wish
to track as a class.QuickBooks does not
number them, so I like to put numbers in front of the name to keep the
unrestricted grouped together and the restricted grouped together (i.e. 100
Admin, 200 Worship, 920 Temp Restricted, etc.)
Funds you
need to specifically track should also be given a class.If someone donates money which the income is
to keep the cemetery maintained, you will need to set this up as a restricted
fund, by assigning it a restricted class.Use the subclasses below the restricted class to identify each fund
(i.e. 920 Temp Restricted:922 Cemetery Fund).
When
entering your beginning balances, most of the items will probably be assigned
to the general fund or unrestricted fund.You don't need to worry about program funds here, as they are used on
the expense side, not the balance sheet.Any assets (money market accounts, buildings, etc.) that are related to
a restricted fund would have the specific restricted class on the line
item.
Here is an
example from my book, QuickBooks for
Churches and Other Religious Organizations.
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[image error]In the
example, the building was purchased with a money donated as a permanently
restricted fund.The building cost
$100,000 so it was recorded in account 1520 Building with a class of
Permanently Restricted Fund.The related
mortgage and accumulated depreciation were also recorded to the Permanently
Restricted Fund.This leaves $10,000
($100,000-$70,000 mortgage -$20,000 depreciation) to be credited to the 3300
Perm. Restricted Net Asset Account with the 930 Permanently Restricted Fund.
This example is for a church, but the same concepts are used for other nonprofits.
