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How can I keep track of separate funds within a checking account?

eaglemtn

I will be taking over the treasurer's position for a club. The club has a single checking account but has several groups within the club that spend money from the single checking account. The club would like to know how much money each group has within that checking account. All of the transactions go through the checking account and are allocated to income/expense categories.

The current treasurer has used the following approach to keep these records. For each of the groups (like Fundraising Campaign, Quilting, Grounds Maintenance, Event) a liability account was set up. The balance in the liability account indicates how much money is available to that group.

Whenever a transaction is made in the checking account, the appropriate income/expense category is used. Let's say it was an expense in the Quilting group. The treasurer would then go to the Quilting liability account and record an increase in that liability account, use that liability account in the category, and indicate in the memo what the expense was. So now the liability account value reflects the expense that was made.

Sometimes transfers would be made between the liability accounts without any entry in the checking account - for example, moving money from the Fundraising Campaign to the Grounds Maintenance liability account to indicate that some of the funds raised will be used by Grounds Maintenance.

This seems to be working OK, but requires recording a transaction in two places usually (in the checking account and in an appropriate liability account). By looking at the balances in the liability accounts, the club knows how much each group currently has available.

Is there a better way to handle this? Is using liability accounts in this manner appropriate? or kind of a workaround to have accounts for each group without affecting the checking account?

Thanks for your any suggestions.

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Comments

Tom Young

Trying to do Fund Accounting in Quicken is difficult at best.

(The terms "debit" and "credit" in the following paragraph are used in the accounting sense of the terms. A credit in a liability Account increases the Account's liability balance while a debit in a liability Account decreases the Account's liability balance.)

I'm not sure I'm really understanding your current procedure, but I assume that at the beginning of the year one-sided, (self-referring), entries are made as "debits" in the individual liability Accounts for each group's allocation of money for the year, effectively turning the "liabilities" into "assets?" Then, after expenses are recorded in the checking Account for each group's expenses, another one-sided, (self-referring), entry is made in each group's liability Account, this time as a "credit", reducing the dollar amount in the liability Account with the balance in the Account now showing "what's left?"

You could do the exact same thing as what you're doing now by using "Savings Goals" instead of liability Accounts. That is, at the beginning of the year you "withdraw" money in the checking Account and put this money in your various Savings Goals. As each group spends its money - which gets recorded in the checking Account - you do a "withdraw" from the appropriate Savings Goal. This approach probably would be slightly faster the going over to each liability Account to make the entry.

I guess another way of doing "fund accounting" in Quicken - and this is only practical for a situation with only a handful of groups and with a small number of transactions - would be to set up separate "checking" Accounts for each group. At the beginning of the year you'd establish new "opening balances" in each "checking" Account such that the sum of the opening balances matched that actual cash in bank position in the real (external) account, and then as expenses were incurred you'd manually enter each expense in the appropriate "checking" Account for each group. Your month-end reconciliations of the real checking account would have to be done en masse by referring to all your groups' "checking" Accounts.

RalphC

You say you created liablilty accounts. A liability account in Quicken would be a loan or other debt and I don't think that's what you want to do. What you want to keep track of are expense categories. You might be on the verge of needing business software rather than personal finance software, but…

I would create the one checking account. Next create the spending categories. As each transaction is entered in the checking register, make use of the Tag field to allocate which group the expense should be debited against. Then, a simple Cash Flow by Tag could generate a report for any time frame you wish to determine who spent what.

As for transferring funds, I think that's more of a budgeting concern and not a transaction recording function. At least, that's the way I would treat it. Quicken would create a budget based on spending categories and you're actually wanting a budget based on your group(s) spending. An Excel spreadsheet set up with the budget amount and the current expenditures for each group from the above Quicken report would easily display the variances.

Ps56k2

basically you have two features in Quicken to help keep track and report on your overall finances - Category & Tag

each can be applied to any transactions - across any Accounts -

For example…. for our vacations - I have setup a Category called Vacation, with sub-categories for " Air, Car, Lodging, Food, Gas, etc….
So for each transaction - pretty much credit card charges - they get a Category manually entered….
Then - for each different vacation - I setup a new TAG - xmas 2022 - and also manually enter that into the Transaction ….

for money as Income - same general idea with Category - Payroll - Interest - eBay selling -
and for xmas gifts we may purchase on behalf of other family members - we use TAG to indicate which family member paid us

eaglemtn

Thanks everyone for your comments.

In Tom Young's comments, the following statement describes what is being done by the current treasurer:

One difference is that entries aren't made at the beginning of each year. The liability accounts have been around for at least 10 years and show the current amount of money allocated for that group. The accounts aren't zeroed out each year. I realize that these aren't debts but I'm guessing the treasurer decided to use liability accounts to keep track of funds for each group - instead of separate "virtual" checking accounts as suggested by Tom Young.

The idea of Savings Goals is something I will look into. I can see that it would be quicker since I wouldn't have to make an additional entry in the liability account - I just would associate the expense entry in the checking account with a savings goal (i.e. group). I guess I would make the savings goal date some time way in the future so it doesn't ever end.

Using tags to specify which group the expense applies to is something else I'll look at. To find the current funds for a group, I think I would have to do an expense report from the "beginning of time" to see what amount is still left.

I'll have to spend more time to see how the current treasurer set up reports and does various tasks. After I'm more familiar with the current process, I will look into some of the suggestions.