B R A D ' s     ON L I N E R     M E M O- - -


  TO:  Interested Onliners                                                                                              FROM: Brad Pendable - CFO
                                                                                                                                                                      
 
   
   RE: 
QuickBooks Pro (QBs) Set up Steps                                                           ORIGINATED:  January 2008                 


        If you are new or just beginning,  please Go Here  for more detailed information.  Below are some specifics if you have been either using QBs or you move to the use of QBs now, etc.        

        Perspective..... let's say that your Ministry:

     1>    Has a 12-31-x1 fiscal year
     2>    And it has been using an edition of QuickBooks Pro (QBs)
     3>    But it has  NOT  been using QBs to effectively do its needed Ministry Fund Accounting/Reporting.
     4>    So it decides that, beginning 01-01-x2,  it will do Fund Accounting as defined within   0041  
               using the QBs Method One as defined within 0622

    A>    Be sure you have your 12-31-x1 year end "ducks in order."   This would include a Bank Reconciliation with only Nov or Dec x1 checks outstanding and the validity  of other assets and liabilities.  

    B>    then you know exactly who belongs, as of 12-31-x1,  to the difference between the Assets and Liabilities, or the overall Net Equity at that time.   Let's suppose it was as follows:

-- Assets of         $ 3,000
-- Liabilities               500
-- Net Equity       $ 2,500

The above does NOT include Land, Buildings and Equipment-LB&E- Assets & related liabilities.  Please go to   0102  for information about how such matters are preferably handled.

       C>    You conclude that the Net Equity (QBs Equity type Accts) of $2,500 are made up of the following individual Fund Balances

 --    Board Discretionary or Current and Prior year
              General Purpose Fund (GPF) balances                $1,700
--    Special Purpose Fund (SPF #1)                                     $   100
--    Special Purpose Fund (SPF #2)                                     $   500
--    Special Purpose Fund (SPF #3)                                     $   200
 

         D>    You  begin a brand new QBs Company effective 01-01-x2,   Do not use the QBs Company that you have using in prior years. You take the following steps within this new QBs Company as you:

    01>  Develop  a numbered "Chart of Accounts" within context of the following:

    A three digit number, or xxx  (1xx = assets; 2xx = liab; 3xx = SPFunds; 4xx = GPFund Income; 5xx=GPF payroll/benefits; 6xx=GPF operating expenses; 7xx= Internal Transfers to SPFunds). Begin with as few 6xx Operating Exp accounts as possible - expand number of accts only when really necessary.
    A three digit number, or xxx, to ID GPFund Operating departments.
    A two digit number, or xx, to indicate why SPFunds change, etc.

    02>  Please see the proposed infrastructure below and set one up within this new QBs Company per your individual  "Asset/Liabilities/Equity" accounts

      Go to Info Below and from such info build  Chart of Accts per the following Infrastructure layout
===================================================================
   QBs Types                                          Number Groupings   
    ************                                            **********************
Assets                                                1xx Assets
Liab                                                     18x Liabilities
Equity                                                 2xx Bux Spending Control
Equity                                                 3xx SPF - Special Purpose Funds
Income                                               4xx GPF Income
Expenses                                          5xx GPF Sal Benefits
Expenses                                          6xx GPF Other Natural Expenses
Other Inc/Exp                                   7xx GPF Internal tsfs
===================================================================
QBs Classes -- 
     xx for SPF
            00 - Begin
            4x - Income
            6x - Expend
            7x - Internal Transfer Funds

     xxx for GPF Departments, as needed         8xx
===================================================================

    03>   Use this infrastructure and set up within this new QBs Company your individual
"Asset/Liabilities/Equity"   Chart of Accounts
    04>   Determine and set up your Ministry Finance Spending Control system. Go Here for more info
    05>   Establish and set up the QBs "Class" feature 
    06>   Set up a "MUST BE ZERO
" QBs "Other Asset" account

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 --  Work from your 12-31-x1 Bank reconciliation info as you --- 

      Take the steps below so you can provide Bank Reconciliation detail  as you ultimately post the detail making up the Bank Acct balance of $3,000 within your QBs Company..

* Using the 12-31-x1 as the posting date for all these transactions.
* Post via the QBs Journal Entry process
* Enter check # and payee info in the Memo Area
* Let's suppose that the above Asset of $3,000 is the Bank Acct only
* And you make a debit and credit as follows for the following:
        **** The Bank Statement balance amount
--- Debit "Bank Acct" and Credit the "MUST BE ZERO" acct
        **** Deposits in Transit
--- Debit "Bank Acct" and Credit the "MUST BE ZERO" acct
        **** Outstanding checks
--- Debit the "MUST BE ZERO" acct & Credit the "Bank Acct"

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--   Post via the QBs Journal Entry process (dated 12-31-x1) other balance forward acct amounts that includes sufficient info for future reference in the Memo Area .
--   Any other Asset --- Post debit to applicable acct and credit the "MUST BE ZERO" acct--  Please go to   0659 for information about the usual year end use of this "MUST BE ZERO" acct.
--   Liabilities --- Post credit to applicable acct and debit to "MUST BE ZERO" acct the total liabilities, of course, would be the above $500.

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--     Then run a QBs Balance Sheet report and see if the "MUST BE ZERO" acct is equal to the Net Asset (QB Equity) accounts of $2,500, plus, of course, the Bank Account totals $3,000 and the Liabilities accounts total $500. If not then go to the QBs Chart of accounts and do what I call "Drill Down"  (by clicking on the amount for that QBs Account within the Chart of Accounts) and get the transaction detail in each QBs account. Go back to the Journal Entry process and make any corrections.

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 --     Via a single Journal Entry dated 01-01-x2 you debit the "MUST BE ZERO" acct balance of $2,500 and credit, along with using the "Bal Forward" QBs Class account,  the following accounts that you have already set up.  Namely,  Board Discretionary or Current and Prior year -- General Purpose Fund (GPF) balances 1,700 -- Special Purpose Fund (SPF) #1l 100 -- SPF #2 500 -- SPF #3 200

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--     You then run a QBs Balance Sheet report (Proof one - see below) as of 01-01-02 and be satisfied that all is OK.

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--  Please go to  0610  plus  0673  and learn about the QBs Proof reports.  You need to know that the QBs Class information agrees with the Equity area that is shown by the Balance Sheet (we call this Proof one) and the QB Class report (we call this Proof Three). The Proof Three report provides you with info as to what you started the year with (see $2,500 above) and what types of Income and Expenditures that were involved during the year 20x2 within all of the QB Equity accounts. Plus you can filter Proof Three for such needed information within one or more specific QB Equity accounts.

       E>    (1) We also highly recommend the following as you establish and manage your overall Ministry finances.

**   BuxBox   for GPF Spending Controls
**   eFinFax      Accounting System for Accrual Basis reporting
**   After the Fact - ATF    system via the use of indicated Contemporary Resources
**   Helps to New  Treasurer at a Church

        F>      We  further recommend that users of Method One of 0601 come up with a manually prepared Excel doc called a "Big Pix" report that is detailed when you Click Here. This "Big Pix" report is a one-page condensation of the information existing within the Proofs One, Two and Three reports discussed above.
 


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                                                                                                     UPDATED LAST:    March 10, 2011

                                                                                                                     Fresno, California
                                                                        Please contact CFO  Brad Pendable by Email at   Brad@rpfin.org  

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