Fund Accounting and journal entries

Fund accounting requires a bank account for normal operating activities and a bank account per fund.

Expenses - you first transfer the amount out of the fund account and into the operating account, then you pay the expense from the operating account

QB is not a journal entry package, journal entries often do not work as intended and do not show in some reports

There are really two ways you can set up the funds:  1) you can set up separate sub-bank accounts for each of your funds; or 2) you can use classes.  When I was setting up QB at our church, I researched this topic thoroughly and I spoke with a couple of CPAs who advised me that the sub-bank accounts can get messy.  So I opted to use classes and it has worked well.  So I have one income account for the restricted funds and one expense account for the restricted funds.  Then I have a class set up for each of the funds and an equity account set up for each of the funds.   When money comes in or goes out for the funds, it goes through the income for restricted funds account and out of the expenses for restricted funds account.  The critical piece here is to make sure that you assign the correct class for each transaction.  I also have a General Fund class and everything having to do with operations gets assigned that class, including all unrestricted income for pledges, contributions or plate offerings.  At the end of the month, I run a P&L by class.   From there I can make my journal entries for the restricted funds into their respective equity accounts.