Split a deposit between fiscal years

Cash Basis reporting is showing 100% of funds in as income. Split invoicing and Accrual reporting might be one answer, or

You can change from recording the entire grant as current income by recording part of it as a current liability, then in next fiscal year move it to income.

We have Quickbooks set to Accrual, however I'm not sure how to reflect this as we don't invoice for grants since it is just money received.

Can you explain more about how I would record it as a liability and then move to income? Not sure what this means.

I'm also concerned that by not recording the full amount immediately, it will cause an imbalance between Quickbooks and our bank account since we do actually receive the money all at once, we are just restricted to using a portion of it it until later.

Thank you for all the thoughts on this matter!

Hello MikiD,

Thank you, but you did not really address my question.

I do not understand what is meant by "record it as a liability". As I stated in my last reply, clarification around this would be appreciated.

"Can you explain more about how I would record it as a liability and then move to income? Not sure what this means."

@Anonymous

You need to follow the Accounting Requirements of this entity and this grant, which you don't even know, right now. You cannot give that type of accounting guidance when you don't know what applies.

@branholm

It isn't a Liability unless it is a Reimbursement Grant. As john-pedro points out, it is Income when you get it. It doesn't matter that you don't intend to spend it until the next fiscal year; that is part of Budgeting, not part of Actuals.

For this: "as we don't invoice for grants since it is just money received."

You should never be using the Deposit screen for this. It's not "just money received." It's Income as Grant Revenue.

You need to follow the regulations for if you are a Cash Basis or an Accrual Basis entity. For an accrual Basis entity, you invoice when you are notified you are awarded the grant, to show the anticipation of the grant. Example: $30,000 as $10,00 per year for three years means three separate invoices per each cycle that you expect to receive these funds.

Or, a Cash Basis entity would use Sales Receipt when you get the money.

For the invoice or Sales receipt, you list a Service item linked to your Grant Revenue account.

For your main concern, this is Not a Split Deposit. You got the funds. What you might be trying to describe is, for example, Restricted Funds. You get a grant for a specific purpose, and that is Restricted Funds. You use some in the current year, which relieves the restriction. It doesn't Change the fact that you got Income. Example:

$10,000 Restricted Income in FY 1. I spend $3,000 in FY 1. I intend to spend the rest in FY 2. They grantor sent it all to me in what is their Fiscal Year Start, but for us, it is part of the End of FY 1 and the Beginning of FY 2.

That means you see this in your Reporting. Your Net Income for the $10,000 Income and the $3,000 Expense means your P&L would show a Net of $7,000 positive. This contributes to Equity. So, what you are asking about is called Rebalancing Equity.

The system uses the Retained Earnings account on the first date of the new FY to put the value from Net Income into it. That is why it typically is renamed for a NFP organization as Unrestricted Net Assets. Equity and "Net Assets" are Synonyms. Your file might refer to this as Fund Balance, even. That is just Equity in various labels and forms for the accounting requirements of your entity.

Here's what I do, then. I get the $10,000 Grant Income and I also Debit Unrestricted Net Assets and Credit Restricted Net Assets for $10,000 to show I have this on Hand. Then, either with every expense entry or monthly or at least at year end, if I spent $3,000 of Restricted Income, I will also Rebalance Equity to show the Relieving of that Restriction for that amount: Debit Restricted Net Assets $3,000 and Credit Unrestricted Net Assets $3,000. Now my FY End total Restricted Net Assets in this one example of the type of activity, shows Net $7,000.

That means the new FY Budget will show we only intend to have Expense. We won;t get More income or New income we already got the Income from the grant in the prior FY.

It's Never Income, again.

Hi. Did you ever get a clear answer for this? I'm wondering the same thing. My guess is to record part of the funds as income and the other part as Deferred Income (aka Deferred Revenue aka Refundable Advances) which is a liability account. It's a liability in that if for some reason you didn't fulfill the services you are to render for the grant, you would technically owe that money back to the funder. So one idea for example would be that if you got $10,000 for example and $2K was for the current fiscal year, you'd record that $2K into one of your income accounts e.g. Foundation Grant and you'd record the remaining $8K as Deferred Income (again, this would be a liability account). Then in the new fiscal year, you would do a journal entry from the liability account to the income account i.e. from Deferred Income to Foundation Grant. Thoughts?

Hi there.  

I deal with this situation a lot as well.  I am working in accrual-based books with a lot of donations that split from month to month or at the end of the year from year to year.  A workaround is to invoice for the charge on the date the charge originated, then accept the payment to the date it hit the bank.  This means it shows on the correct date in your bank register, but will sit in the other month or year on your P&L.  If you're dealing with merchant processing fees, you can invoice the full donation amount, accept payment for the full donation amount and deposit to undeposited fund.  Then you can do a bank deposit and add in the merchant fees as a negative amount.  This balances your total deposit amount but keeps your full donation amount intact.   Hope this helps.

There was a way to set up an accrual account in your Chart of Accounts to save you a few steps at year end, but I can't quite remember the steps for that process.

Note that if you are receiving multi-year grants and are accrual not cash based, then you should record the entire grant amount when the grant is confirmed.  This can be challenging as many boards expect to see cash-based reporting on money received, while your books will reflect accrual based receipt of grant money.

Good luck!