How to Record Your Ministry’s Beginning Fund Balances in QuickBooks Online

Last month, I showed you how to record restricted contributions for your ministry, how to track the related expenses, and how to release the funds from restriction in QuickBooks Online.

To conclude the tracking of restricted funds in QuickBooks Online for churches’ series, in this tutorial, I will show you how to record your beginning fund balances.

If you have been using QuickBooks Online for a while, you will notice every year on January 1st or the beginning of your fiscal year, your net surplus or deficit from all of your fund balances closes to the QuickBooks Retained Earning equity account.

One of the many year-end tasks you need to do is move the fund balances from the Retained Earnings equity account to the with or without donor restrictions net asset accounts. This process ensures your fund balances are accurate.

Log into QuickBooks Online. Watch the video and follow along with the guide.

Record Beginning Fund Balances

Run the Statement of Activities by Class report for the prior year and make a note of each fund net surplus or net deficit amount.

Click the +New icon and select journal entry under the other column.

  • Journal date = January 1st of a new calendar year or the first date of your fiscal year

  • Journal number = continue with your journal numbering sequence

  • Line 1 Entry - Clearing account

    • Account = select the journal clearing account

    • Debit = enter the amount as zero

    • Description = enter “Record 12/31/YY fund balances”

    • Name = leave blank

    • Location/Division = 1. Without Donor Restriction

    • Class = Select the General Fund class

  • Line 2 Entry - Record the Retained Earnings amount for the General Fund

    • Account = select the Retained Earnings account

    • Debit = enter the net surplus amount

    • Description = enter “Record 12/31/YY fund balances”

    • Name = leave blank or use a generic customer named “YE Adjustment”

    • Location/Division = 1. Without Donor Restriction

    • Class = Select the General Fund class

  • Line 3 Entry - Record the General Fund Net Asset balance

    • Account = select the Without Donor Restriction:General Fund net asset account

    • Credit = enter the net surplus amount

    • Description = enter “Record 12/31/YY fund balances”

    • Name = leave blank or use a generic customer named “YE Adjustment”

    • Location/Division = 1. Without Donor Restriction

    • Class = Select the General Fund class

  • Line 4 Entry - Record the Retained Earnings amount for the Temporary Restricted Fund

    • Account = select the Retained Earnings account

    • Debit = enter the net surplus amount

    • Description = enter “Record 12/31/YY fund balances”

    • Name = select the customer/project (aka your fund name)

    • Location/Division = 1. Without Donor Restriction

    • Class = Select the General Fund class

  • Line 5 Entry - Record the Temporary Restricted Fund Net Asset balance

    • Account = select the With Donor Restrictions:Temporary Restricted Fund net asset account

    • Credit = enter the net surplus amount

    • Description = enter “Record 12/31/YY fund balances”

    • Name = select the customer/project (aka your fund name)

    • Location/Division = 1. With Donor Restriction

    • Class = Select the Temporary Restricted Fund class

  • Repeat the same steps in lines 4 and 5 to record additional restricted fund balances that make up the retained earnings account balance.

  • Once done, copy and paste the description text in the journal entry memo box. Then, click save and close.

Run the statement of financial position on January 1st or your fiscal year beginning date and you will notice your retained earnings account is zero and your with and without donor restrictions, net asset accounts now have all of the fund balances we recorded above.


 

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How to Record Beginning Fund Balances in QuickBooks Online
 

Do you have questions about using QuickBooks Online to run your nonprofit or church? Contact me - I am happy to help!