David1985
offlineMember
Could somebody explain me why do they have to make so many entries?
Why not do this?
DR: Cash
CR: Pledge A/R
DR: Contribution Rev - Temporarily restricted
CR: Contribution Rev - Unrestricted
And what kind of account is "Satisfaction of time restriction - Temporarily restricted" ?
Please help me with this.
Thanks
Yvonne570
offlineMember
It's for control and disclosure purposes. They identify revenues as restricted (permanently or temp) to keep other's hands off - not available. The additional controls are in place to ensure regulatory compliance with spending of tax payer funds or donations made from contributors. If everything was handled like GAAP accounting for not for profits and government, it would be a mess - as they do not segregate what's hands off or whats available to spend.
Yvonne570
offlineMember
They have 1 cash account - but the funding received is offset by the net assets (indirectly) - moved over as unrestricted/temp restricted/permanently restricted.
So knowing that whenever there's a debit (cash received donations), there's a credit, contribution rev - temp restricted if there was a restriction of time or purpose, etc.
Then when the expenditure is made, you have to release the restriction
DR: net assets released from restrictions - temp restricted
CR: net assets released from restrictions - unrestricted
DR: expenditure
CR: cash
The added entries seem like a pain but would be a disaster if they did not have these entries.
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