CNA Accounting - Dedicated Accounts: Alternate Method of Recording/Reporting of Dedicated Accounts For Additional Detail

Dedicated Accounts are used for the purposes of tracking Designated and Restricted Net Assets.  
 
These are monies that are either: 
 
  • Designated for a specific purpose (i.e. Second Collection) that will be received then turned around and sent to a parent organization or others, or 

  • Restricted by a Donor's intention which includes the categories of: 
    • Temporarily Restricted, where a period of time or purpose releases the restriction (i.e. Capital Campaign), or 
    • Permanently Restricted where there is no time/purpose release of restriction (i.e. Scholarship) and the church is only allowed to use the interest income and not use the principal

 

Dedicated Accounts are reported on the Statement of Financial Position summarized by Restriction Category under the Net Asset section and also reported in detail on the Statement of Dedicated Accounts.  Beginning Balances for Dedicated Accounts are generally entered as a Credit to the Dedicated Account and a Debit to the Net Asset account per EntityDedicated Account balances carry forward each year and do not update the Net Asset accounts, as do Income and Expense Accounts.  
 
For most churches, Dedicated Accounts are used as an In/Out account; where the same Dedicated Account is used both in Deposit and Bill Entry.  Using the Dedicated Accounts in this manner, you will see the beginning and ending balance as well as the month/year's Debits and Credits reported in the single Dedicated Account.
 
Alternate Method
However, some churches require additional detail and will create unique Dedicated Accounts for Income purposes and Expense purposes to track the various sources of income and reasons for expenses.  Such Dedicated Accounts may be grouped together by a specific level assigned in the Chart of Accounts.  In this case, the Statement of Dedicated Accounts will report the Credit (Increase) to the accounts created for the Income purposes and Debits (Decrease) to the accounts created for Expenses purposes and the net effect of the Debits and Credits would report in the sub-total of the level assigned.
 
If your church requires such detail in your Dedicated Accounts, we recommend that you assign or create a single Dedicated Account to record the Beginning and Carry Forward Balance of the groupings/level of your Dedicated Accounts.
 
If you wish the net effect of the Debits and Credits to update the single Carry Forward Balance account, you will need to manually adjust the Dedicated Accounts at the end of the Fiscal Year.
 
  1. Print the Statement of Dedicated Accounts for the last month of the Fiscal Year.
  2. Create a Journal Entry dated the last day of the fiscal year that will Debit (Decrease) those Dedicated Accounts assigned for Income Purposes and Credit (Increase) the Dedicated Accounts assigned for Expense purposes and enter the net effect in the Carry Forward Balance Dedicated Account.  
This will zero out the Income/Expense purpose Dedicated Accounts and update the Carry Forward Balance Dedicated account.
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