Advertise here    

QuickBooks Forums      

Go Back   QuickBooks Forums > QuickBooks Software Support > Premier Nonprofit Edition Forum

Reply
 
Thread Tools Rate Thread Display Modes
  #1  
Old 09-30-2016, 03:06 PM
tvmangum tvmangum is offline
Registered User
 
Join Date: Sep 2016
Location: North Carolina
Posts: 15
Fundraising expense as income

I finally have a COA that is going to work for our PTA. Everything is actually going to work correctly--I hope, but I do have one questions.

The COA that I received has fundraiser expenses listed as income. I'm sure there may be a reason for this but I have not been able to figure it out even after doing the old Google search. For example, the COA has the following:

Fundraiser #1
Fundraiser #1 Income
Fundraiser #1 Expenses

all showing on income side of the chart. Should I enter the expenses as negative numbers for the budget? If anyone can explain to me why this expense is on the income side I would be grateful.

Maybe one day I can return the favor and start answering questions instead of constantly asking questions.
Reply With Quote
  #2  
Old 10-01-2016, 05:58 AM
Rustler Rustler is offline
Registered User
 
Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,199
Expenses should not be posted as income accounts at all.

whoever set this up is try to get the chart of accounts to do the reporting for them, the parent account will act as a summing account, netting the income and expense. Just the wrong way to do it.

Fundraisers, should not be accounts any way, they are best tracked as a class. Expenses like table rental, advertising etc etc are just that expenses, sales and donations are income. and you use class reporting to show the income or loss of a fundraiser.
Reply With Quote
  #3  
Old 12-15-2016, 09:54 AM
Lorin Browning Lorin Browning is offline
Registered User
 
Join Date: Apr 2004
Location: Landrum SC
Posts: 519
Rustler's reply is excellent.

Generating a Statement of Activities as required by FASB Statement No. 117 Financial Statements of Not-for-Profit Organizations can be done as tvmagnum is doing, but using the QuickBooks class function has several advantages:
  • It lessens the "bloat" required for the chart of accounts
  • It makes the Statement of Activities easier to read and to understand when the major functions of the organization are in columns
  • It makes preparation of the functional expense section of the 990 easier
and there are others advantages.

There is no need to reinvent the wheel when QuickBooks provides an easy tool to use.

The three main classes normally will be (1) Fund Raising, (2) Program Services, and (3) General and Administrative. If desired, each of the three main classes can have subclasses. For example, if there are multiple fund raising activities during the period, there can be a subclass each activity. Of course, if one is not concerned with audited financials, then one can do whatever the governing body allows or approves.
__________________
Lorin Browning, Ph. D.
Fellow -- National Tax Practice Institute
lorin@lorinbrowning.com

Last edited by Lorin Browning; 12-15-2016 at 08:26 PM.
Reply With Quote
  #4  
Old 12-16-2016, 04:58 AM
Rustler Rustler is offline
Registered User
 
Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,199
Thanks for the reference Lorin, one question.

Does the IRS abide by the FASB ruling?

I keep accounting per the IRS requirements, they frown on netting as I understand it.
Reply With Quote
  #5  
Old 12-16-2016, 09:49 AM
Lorin Browning Lorin Browning is offline
Registered User
 
Join Date: Apr 2004
Location: Landrum SC
Posts: 519
Yes and no. There's financial accounting and IRS accounting.

Part IX of form 990 does require expenses to listed by program service expenses, management and general expenses, and fund raising expenses. This is the part of the 990 for which my comments above are most relevant.

But Part IX Net Assets or Fund Balances (that's the same as the Equity Section of the Balance Sheet for for-profits) allows the taxpayer to report whether it follows SFAS 117 or not. Those who follow SFAS 117 have to report equity as Unrestricted net assets, Temporarily restricted net assets, and Permanently restricted net assets (a report which is almost impossible to get directly from QuickBooks, even from the so-called Non-profit Edition). Those who do not follow SFAS 114 report Capital stock or current funds, Paid-in capital surplus, Retained earnings, Total net assets or fund balances.

Fund balance accounting for 501(c)(3) has been a "no no" since 1992, yet IRS still allows fund accounting for income tax purposes; GAAP does not.

Entities other than 501(c)(3) entities also report on form 990. But a 501(c)(3) will not pass an external audit exam without adhering to SFAS 117 (and other GAAP requirements).

If a company is big enough to require external audits and does not follow GAAP, it will be paying a CPA firm a significant amount each year to prepare appropriate financials from non-GAAP compliant financials.

SFAF 117 is in the process of being modified -- not so much as it relates to reporting functional expenses but as to how the "equity" section is broken down.

One comment on 501(c)(3) entities: All are exempt from taxation on (most)income, but only some are allowed to receive tax-exempt donations. Schedule A is where IRS determines whether the entity is a public charity or not.
__________________
Lorin Browning, Ph. D.
Fellow -- National Tax Practice Institute
lorin@lorinbrowning.com

Last edited by Lorin Browning; 12-17-2016 at 03:25 PM.
Reply With Quote
  #6  
Old 12-17-2016, 04:07 AM
Rustler Rustler is offline
Registered User
 
Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,199
Thanks Lorin, succinct easy to understand answer as always - appreciate it
Reply With Quote
Reply

Bookmarks
Bookmark and Share
Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 11:07 PM.


 

Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
All contents copyright (c) by AccountingUsers Inc.