How to offset an expense reimbursed from a different asset account?

[FM8]

I have a situation in my not-for-profit where I have funds held in trust for covering vehicle expenses (a bequest). I have paid out the expenses from my usual bank account and recorded them as normal expenses. The trust funds have now been released to reimburse them. I have made the Transfer to reduce the trust funds asset account and moved the money to the transaction account. How do I now offset the expense line? I  want the P&L to show this as reduced expenses because they were covered by the bequest funds we already hold, not our other income.

[Steven_Product Champion]

Hi FM8, 

With this inquiry it is tricky as we would need some more info to get a better idea of your process. You mentioned that you have already paid the expense from the bank account, then transferred the funds to a transaction account. It is the next details you mentioned, what amount or piece of this transaction are you trying to offset now and which expense line are you referring to?

Whilst we can advise on the product, we are not trained accountant's and it may best to consult with a bookkeeper or accountant first about the details of how the reimbursement should be recorded on your books correctly to cover the expense. 

-Steven

[FM8]

Ok, thanks Steven.

I have paid vehicle expenses from bank account 1, our general transaction bank account. These expenses are reported on P&L under "Vehicle Expenses". We then applied for permission to reimburse them from Bank Account 2, which holds the bequest funds separately and is listed as a separate Asset account on the balance sheet. Permission was given and the funds were transferred to our general transaction bank account. I am wondering if there is a way to record the transfer as a negative expense to cancel out the expense - ie to show that we have not exceeded budget on that line, as the intention is that the bequest covers it until those funds run out, so we have not budgeted current income to cover these.

I hope that makes it a little clearer. 

Thanks for any help you can give.

FM