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Nathan, not sure if you will be able to design a Chart-of-Accounts
that is better than others in existence but go ahead.

I've worked with various churches that use fund accounting and steered all
of them to one package that handles this in a seemless fashion. The
biggest problem with traditional G/Ls is that fund accounting needs more a
double sided entry. For example, when they receive deposits it's easy
enough to debit cash and credit income, but you also must credit the funds
receiving an allocation of the overall deposits. In other words, your
checking account goes up by $1,000, but that is allocated between things
like General Fund, Compassion and Missions.

On the other side of the equation, when paying bills you credit the
checking account and debit the expense, but you also debit the fund: you
not only reduce the checking account, you have to reduce the quantity
available for the specific fund concerned.

The software I've used does this by having a simple Account/Fund
structure, with fund not being universally used. So the chart of accounts
looks like:

Type Account Description Fund
Asset 1000 Checking
Fund Bal. 3000 General Fund
Fund Bal. 3100 Compassion Fund
Fund Bal. 3200 Missions Fund
Income 4000 General Fund Income 3000 General Fund
Income 4100 Compassion Fund Income 3100 Compassion
Fund
Income 4200 Missions Fund Income 3200 Missions Fund
Expense 5000 Rent 3000
General Fund
Expense 5100 Building Supplies 3000
General Fund
Expense 5200 Insurance 3000
General Fund
Expense 6100 Compassion Expense 3100 Compassion
Fund
Expense 6200 Missions Fund 3200 Mission Fund

What the software appears to do on a cash receipt, for example, is simply
debit Checking. By posting the income to 4000 it can be reflected at two
levels, as income and as increasing the amount held in the Fund Balance.
In a similar fashion, an expense simply credits cash, but the debit can be
reflected as both an expense and as reducing the amount held in the
applicable fund.

Under this system the total amount held as debits in the Asset Accounts
should equal the total amount held in Fund Balances, the former as debits
and the later as credits. This works very well for the four different
organizations that use it and has been the easiest method of fund
accounting for the non-accounting people I've dealt with.

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