L&P GAAP Compliance - Accounts: What are Release Accounts?

What are Release Accounts?

Release Accounts are used in the automated recording of a journal entry generated when monies from donor-restricted funds are used to pay expenses.  When the Account Restriction type selected on the Bill Information Screen includes the words, 'With Donor Restrictions," this triggers the recording of the transfer from restricted funds to unrestricted funds using the Release Accounts and resulting in an associated journal entry which is linked to a bill.

For example, The Cemetery Fund has temporarily restricted funds.  The donor specified that the funds only be used for memorials. The church needs to pay a $500 invoice for memorials, and also to record a transaction that recognizes that the restricted funds have become "unrestricted."

The church enters a bill and selects one of the following account restriction types: With Donor Restrictions (Temp), or With Donor Restrictions (Perm)Since the bill is entered with one of the 'with' restriction types,  the software will automatically generate an Associated Journal Entry that releases restricted income to unrestricted

While the type Without Restrictions is an option, this type does not generate an Assocated Journal Entry

In this example, the bill was entered with an Account Restriction type of 'With Donor Restrictions (Temp).'  Once the bill is submitted, there will be an Associated Journal Entry generated by the software using the Release Accounts.

The Associated Journal Entry that is created will reference the bill number.

The GAAP Compliant Statement of Activities will reflect that a bill was paid (unrestricted) and display the transfers between restriction accounts.

 

 

 

 

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