In this article follow the mention 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.
- 1 Why do you Need to Set up Restricted Funds in QuickBooks?
- 2 How to Set up Restricted Fund in QuickBooks?
- 3 FAQs about Restricted Funds Set up in QuickBooks
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 language, restricted funds are the funds which the trustee of the charity are 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 grant maker.
How to Set up Restricted Fund in QuickBooks?
Here are the steps to set up a specific restricted fund in QuickBooks:
Total Time: 35 minutes
In the QuickBooks account, select the Reports menu
Step 2: Select Balance Sheet by Class Report
Choose Company and Financial and then select the Balance Sheet by Class report
Step 3: Customize the Report
Select the Customize Report button
Step 4: Go with Account Filter Option
In the specific Account filter option, select Multiple Accounts, and tick the accounts you wish to view. Select Ok
Step 5: Click on which class you want.
In the Class filter section, select Multiple Classes and tick the class you wish to view.
FAQs about Restricted Funds Set up in QuickBooks
1️⃣ 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 in a specified period. Typically, these grants are used to spend on a particular program or mission or the enterprise, and cannot be used for the operational costs of the business.
2️⃣ 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.