Hi. I'm new to QBO (and this community) as of January 2020 and am the bookkeeper for a small church w/ 6 employees, but am certainly no accountant. We receive designated contributions for several things (Building fund, children's camps, etc.) and based on my research, felt like classes would be the best way to track those amounts within our main checking account. For some items such as Building Fund, we maintain a separate savings account at the same bank & at the end of the month we transfer those designated contributions from our checking into the stand alone savings account. I understand how to do a transfer from one account to the other, the trouble I'm having is with the classes. How do I get that amount to deduct from the Building Fund "class" & into the savings?
Classes are a tag to follow the money, so to speak. The only reason to change the class of designated funds would be if the trustees reallocated monies. As long as the building fund keeps growing from contributions it does not matter which bank account it resides in. Transfer between bank accounts is simply moving money from one hand to the other.
If you do need to reallocate designated building funds to missions, for example, you can change the class through a journal entry even though you are not physically moving any money. Money on hand is a current asset so a journal entry will use a single account where at least some of the money is. It involves Credit account for existing class and Debit same account, same amount for new class.
You can do the same in a check or deposit with positive amount new class and negative amount old class with net check/deposit being zero
Thanks for replying so quickly! To clarify, yes, the Building Fund will continue to grow from contributions, but the powers that be prefer we temporarily hold it in checking & then move it to the more permanent savings. Is there a way to show that disbursement to savings so it'll appear under the class on the P&L for church leaders to see it's not still sitting in checking? Would a journal entry do the trick and if so, the Building Fund class would be on one side, but what account would be on other side? Please excuse my lack of knowledge on all of this. Learning as I go...