Thanks for the detailed explanation of your situation. The ideal approach is to create brand new Balance Sheet accounts (typically under Liabilities or Equity, depending on your church's specific reporting preferences) for the designated, restricted, or holding funds. You will then use journal entries to move the current balances out of the P&L and into these new accounts as of a specific start date (like the beginning of the fiscal year)
Additionally, the Reclassify Transactions tool can move transactions from one account to another; however, it cannot change an account type from Profit and Loss to Balance Sheet, making it an unsuitable tool for this purpose.
While QuickBooks technically allows you to edit an account and change it from an Income/Expense type to a Liability type, doing so will alter your historical financial reports. This would distort your past years' P&L statements, which we want to avoid.
By creating fresh accounts and using journal entries, you preserve your history while giving yourself a clean slate. Because church fund accounting has specific legal and tax tracking nuances, it is highly recommended to have a certified accounting professional or auditor review the account structure before making the change.
Feel free to add a reply below if you have other concerns.
