CMS Fund Accounting - Dedicated Accounts vs. Asset Accounts

PROBLEM:  I want to turn two regular savings accounts into dedicated accounts. I want the regular savings accounts to have zero balances. But I want the dedicated accounts to have positive balances-not negative ones. But a journal entry would be a credit to a bank account and a debit to the dedicated account. This leaves the regular bank account with a lesser balance which is what I want but then the dedicated account appears to have a negative balance.

SOLUTION:  The first thing we need to do is define what our Asset Accounts and Dedicated accounts are:
 
Asset accounts are TANGIBLE moneys, securities or properties, i.e. this is the money in the bank, or car, or church, or investments.
 
Dedicated accounts represent the ACTIVITY of gaining or spending moneys, securities or properties, i.e. this is the amount of Fundraising that you did, or the amount of Interest Activity you had, etc. (the amount in the dedicated accounts represents the amount of assets that you have for this Dedicated activity).
 
Since they are 2 different things, they cannot be used equally.  You cannot take money out of dedicated and put it in the bank or vice versa (because it's not really money in the dedicated account, it's the "activity").
 
Instead of thinking about Assets, Liability, Net Assets, Income, Expense and Dedicated, think of it this way... 
  • What I have (assets)
  • What I owe (liabilities)
  • What I'm worth (net assets)
  • What I've gained (income)
  • What I've lost (expense)
  • Of our assets, what's not mine (dedicated)
Let's figure out what's really happening...  You're turning two savings accounts into Dedicated accounts?  So the MONEY is already in your system, it's in your Savings accounts.  

Now you need 2 Dedicated Account to represent that the money in those Savings account is not yours.  You must first determine if the money that is in the savings account was either money earned this year (income) or money earned in a prior year (net assets). 

If the money was earned THIS YEAR and you're moving that to dedicated, you would do a Journal Entry between the new dedicated account and the INCOME account that you originally used to record the gain.

If the money was earned LAST YEAR and you're moving that to dedicated, you would do a Journal Entry between the new dedicated account and the NET ASSET account.

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