Using Tranfer accounts (correctly)

[fstuart]

I have three funds: Fund 10 for the General Fund; Fund 20 for Temporarily Restricted Accounts; and Fund 30 for Fund for the Future (building fund in reality).

I want to transfer $9,000 from my General Fund (Fund 10) into my Fund for the Future (Fund 30). We only have one checking account, so I am not transferring from one checking account to another checking account. I am literally "transferring money" (on paper) from Fund 10 to Fund 30.

SPECIFICALLY, please show me how to transfer $9,000 from Fund 10 to Fund 30 as it should be done in the Fund Accounting "Enter Transactions" functionality.

I have the "Transfer to" and "Transfer from" accounts set up in each fund as follows:

10-9000-000 TRANSFER ACCOUNTS
10-9001-000 TRANSFER TO OTHER FUNDS
10-9010-000 Transfer to Fund 10
10-9020-000 Transfer to Fund 20
10-9030-000 Transfer to Fund 30
10-9500-000 TRANSFER FROM OTHER FUNDS
10-9510-000 Transfer from Fund 10
10-9520-000 Transfer from Fund 20
10-9530-000 Transfer from Fund 30
20-9000-000 TRANSFER ACCOUNTS
20-9001-000 TRANSFER TO OTHER FUNDS
20-9010-000 Transfer to Fund 10
20-9020-000 Transfer to Fund 20
20-9030-000 Transfer to Fund 30
20-9500-000 TRANSFER FROM OTHER FUNDS
20-9510-000 Transfer from Fund 10
20-9520-000 Transfer from Fund 20
20-9530-000 Transfer from Fund 30
30-9000-000 TRANSFER ACCOUNTS
30-9001-000 TRANSFER TO OTHER FUNDS
30-9010-000 Transfer to Fund 10
30-9020-000 Transfer to Fund 20
30-9030-000 Transfer to Fund 30
30-9500-000 TRANSFER FROM OTHER FUNDS
30-9510-000 Transfer from Fund 10
30-9520-000 Transfer from Fund 20
30-9530-000 Transfer from Fund 30

THANK YOU!!

[Jeff]

Typically the transfer transaction would look like this:

Code: Select all

Account     Description            Debit    Credit
10-1110-000 Bank Account                    9000.00   
10-9030-000 Transfer to Fund 30    9000.00            
30-9510-000 Transfer from Fund 10           9000.00   
30-1110-000 Bank Accoount          9000.00          

The transaction does the following.
decreases bank account in fund 10
transfer account out of fund 10 to fund 30
transfer account in from fund 10 to fund 30
increase bank account in fund 30

[NeilZ]

Jeff,

In your example, let me see if I followed you correctly, as you know I'm more membership/contributions than accounting, but I'd like to be able to understand the accounting side more.

The bank account for fund 30 is the same physical account that is referenced under fund 10. This is basically an accounting transaction, and the money never moves anywhere,

[Jeff]

Correct,

The 1110-000 in the example is the bank account. There is a credit to this account in fund 01 which reduces the 10-1110-000 account and a debit to the 30-1110-000 account which increase the account in fund 30. Because there is a debit and a credit to the overall balance for the 1110-000 doesn't change.

We want our transactions to balance within each fund, that is why we need to use transfer accounts to balance the transaction in each fund. If we don't balance the transaction in each fund, when we run a balance sheet or trial balance for the individual fund it will be out of balance. This also changes the net income for each fund, but the net income for all funds remains unchanged.

I hope this second part makes sense.

[NeilZ]

Perfect sense. Thanks.

[fstuart]

Thank you, Jeff. The exact process you gave is great.

And, thank you, Neil, for asking your question. I had the same question in my mind. I did not realize that we balanced the checking account using only the account number, not the fund number.

I still don't think I understand this type of transfer, but I will get one of my accounting friends to explain it.

God bless you both!!

Forrest