How/when to use a dedicated account
Dedicated Accounts are used as in-and-out accounts. Donations to these accounts are treated the same way an Income would be treated, as a Credit to the Account. Payments from these accounts are treated the same way an Expense would be treated, as a Debit to the Account. When you close the year, the Balance of a Dedicated Account would be brought forward to the next year.
This is in contrast to using Entities where Income and Expense Accounts are used to track monies allocated to a specific entity (or fund) and at the close of the year, the software calculates the new year's beginning balance (Balance at beginning of yyyy + Income - Expense = Balance at beginning of yyyy+1).
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
Create a dedicated account as you would any other Account except the Account Type would be Dedicated.
The effect of Debits and Credits on Dedicated Accounts:
|Typical Account||Typical Balance||Debit Effect||Credit Effect|