In this article follow the mentioned steps to “set up restricted funds in QuickBooks“. One of the primary areas of confusion in non-profit organizations is how to record restricted contributions.
As per accounting rules, restricted contributions should be recorded in the tenure when the funds are promised, even if they are received in a future period. This is where QuickBooks steps in.
Although QuickBooks does not provide a direct opportunity to monitor restricted funds, it is possible to do so using classes and allocating all restricted funds to a class. After that when a report is run, you can opt for a particular class filter to give back only the funds that are restricted in your register.
Note: All non-discretionary funds should be created with a separate restricted fund class.
Why do you Need to Set up Restricted Funds in QuickBooks?
A restricted fund is used as a reserve account where the money is stored for specific uses and purposes. Furthermore, restricted funds promise reassurance to the donor that the contributions provided by them are utilized in the way they have selected.
In layman’s language, restricted funds are the funds that the trustee of the charity is bound to spend in a particular way or for a particular reason as mentioned in a service contract or funding letter of offer, or as clearly stated by the donor or grantmaker.
How to Set up Restricted Funds in QuickBooks
Here are the steps to set up a specific restricted fund in QuickBooks:
- In the QuickBooks account, select the Reports menu.
- Choose Company and Financial and then select the Balance Sheet by Class report.
- Select the Customize Report button.
- In the specific Account filter option, select Multiple Accounts
- Tick the accounts you wish to view. Select Ok.
- In the Class filter section, select Multiple Classes and tick the class you wish to view.
I hope the above provide information will help you if you are not able to set up the restricted funds in QuickBooks, your query with QuickBooks help.
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Can Grants be Seen as Restricted Funds?
Restricted funds are the least-favorite type of funds to accept since you are compelled to spend them in a particular specified period. Typically, these grants are used to spend on a particular program or mission, or enterprise, and cannot be used for the operational costs of the business.
How Restricted Funds are Different from Unrestricted Funds?
Restricted funds are a type of capital that is set aside for a specific purpose on account of designated giving. They are restricted to that purpose only and cannot be used for any other purpose, or expense. In contrast to it, unrestricted funds can be used up for any kind of legal purpose that the organization deems fit.
Setting up restricted funds in QuickBooks is imperative for businesses and cannot be delayed. By following the above-mentioned steps, everyone can set up a specific restricted fund in QuickBooks.