cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Not applicable

How do I transfer money from an expense account (checking) to an existing equity account (temp. restricted net asset) in QuickBooks Online?

We are a small non-profit with a scholarship program.  We track our restricted donations and awards using a restricted net asset account.  This allows easy monitoring of the scholarship fund on our statement of financial position report. I now want to move funds from our checking account to the equity account.  What is the best mechanism for doing this?

Solved
Best answer 10-15-2018

Accepted Solutions
Established Community Backer ***

Checking is not an expense account; it is part of Banking...

Checking is not an expense account; it is part of Banking = a Source/Destination of funds. You use these funds on things like Expenses.

"We track our restricted donations and awards using a restricted net asset account."

You first acknowledge them as Income. That way, they already update Equity for you. If you want to Rebalance Equity between restricted and unrestricted, then along with (for instance) a $100 donation as income, you manually and additionally Debit Unrestricted Net Asset and Credit Restricted Equity (increases it), for the Fund balance there to increase.

"This allows easy monitoring of the scholarship fund on our statement of financial position report."

Yes.

"I now want to move funds from our checking account to the equity account."

See, that's the mistake you are making. Checking is part of Asset and already is contributing to Equity. You don't do what you are asking.

"What is the best mechanism for doing this"

What you do, for instance, is Spend restricted funds as Expense. That would mean, additionally, another Manual entry that will Debit Restricted Equity (decreases it) to show you Used funds as promised, relieving the restriction.


You simply track income and expense as usual. You additionally Rebalance equity for each activity, so that the Current status of Restricted Funds is clear.


If you use Class Tracking for Restricted and Unrestricted, that helps, for the Income statement, as well. That way, your Net Income seen in Equity should always be part of Unrestricted Net Assets in Equity, since that is where they are "closed to" are fiscal year end.


View solution in original post

2 Comments
Established Community Backer ***

Checking is not an expense account; it is part of Banking...

Checking is not an expense account; it is part of Banking = a Source/Destination of funds. You use these funds on things like Expenses.

"We track our restricted donations and awards using a restricted net asset account."

You first acknowledge them as Income. That way, they already update Equity for you. If you want to Rebalance Equity between restricted and unrestricted, then along with (for instance) a $100 donation as income, you manually and additionally Debit Unrestricted Net Asset and Credit Restricted Equity (increases it), for the Fund balance there to increase.

"This allows easy monitoring of the scholarship fund on our statement of financial position report."

Yes.

"I now want to move funds from our checking account to the equity account."

See, that's the mistake you are making. Checking is part of Asset and already is contributing to Equity. You don't do what you are asking.

"What is the best mechanism for doing this"

What you do, for instance, is Spend restricted funds as Expense. That would mean, additionally, another Manual entry that will Debit Restricted Equity (decreases it) to show you Used funds as promised, relieving the restriction.


You simply track income and expense as usual. You additionally Rebalance equity for each activity, so that the Current status of Restricted Funds is clear.


If you use Class Tracking for Restricted and Unrestricted, that helps, for the Income statement, as well. That way, your Net Income seen in Equity should always be part of Unrestricted Net Assets in Equity, since that is where they are "closed to" are fiscal year end.


View solution in original post

Not applicable

Funds don't need to move from checking to restricted net...

Funds don't need to move from checking to restricted net assets. Simply do a re-class journal entry to move unrestricted net assets to the restricted net assets account you have created.  

Need to get in touch?

Contact us