"Andrew" <andrew[at]jkl.com> wrote:
- quote -

snip

- quote -

Been a long time since I did any serious accounting, but it
seems to me it's most likely a prior period adjustment.
Debit cash, credit members' equity or whatever your capital
account is called.

Just to throw in another monkey wrench <G
Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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Andrew wrote:

- quote -

Geez - that's INCOME, EXPENSES (!), and CHECKBOOK BALANCE.

--
Regards -

- Andrew

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Gene E. Utterback, EA wrote:
- quote -

Gene - thanks. I probably should tell you that this "NPO"
is a small athletic club with a bank account less than $2000
and income/expenses less than per year. I keep the books
using Quicken. We don't file tax returns, we generate very
little "income" (not even checkbook dividends!; all the
money is for participation fees and income to offset
expenses. Antything left over from year to year we donate
to charity. I do have to report 3 things (each a single
figure, no breakdown required) to our national organization
each year - INCOME, DIVIDEND, and CHECKBOOK BALANCE. That's
it. They apparently roll all these #s up on a national
level.

So my question really boiled down to whether this income
received after the close of the previous fiscal year should
be in the 'income' category or a 'negative expense'
category. According to your post, it is income. Others say
simply offset the expense even if it is across fiscal years.
Sigh. Back to my original quandry. I think I'll simply ask
the 'home office'.

--
Regards -
- Andrew

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"Andrew" <andrew[at]jkl.com> wrote:

- quote -

It sounds to me like your original accounting might have
been incorrect in the first place. When you say "escrow for
the use of a city park" it sounds to me like your NPO made
some sort of damage deposit for the use of a facility.
Unless the NPO went into the transaction *expecting* to lose
the deposit, the better accounting would have been to debit
an asset account - something along the lines of "Refundable
Deposits" - instead of expensing it. Then, when the deposit
was returned, you'd credit the Refundable Deposits account.
Net result: no "bottom line" effect in any period.

However, if the original accounting was to expense (debit)
the "escrow", then I'd say the correct accounting would be
to reverse the expense, i.e., credit the "escrow."

Remember, the periods used in accounting - months, quarters,
and years - are entirely arbitrary. Even though these
periods have been "sanctioned" by tax codes and SEC
regulations and so forth, they're still arbitrary. Because
of the "magic" of having crossed over a year-end you have a
positive expense in one period and a negative expense in the
following period. But, for these two years, what *was* your
"escrow" expense? $0! Lo and behold, if you take the
positive expense in the first year and the negative expense
in the next year that's exactly what you get.

Too, there's the argument that anything classified as
"income" should have resulted from the organization's
"income earning" efforts: sales of products, donations
successfully solicited, etc. The return of a deposit
clearly doesn't meet this test.

Tom Young

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"Andrew" <andrew[at]jkl.com> wrote:

- quote -

The best piece of advice I can give you is one you will not
like. If you are handling the accounting for an NPO
(non-profit organization) and you don't know how to handle
this, you are in way over your head. Get professional help
before you do something you regret.

With that caveat, when a refund is received in the same
fiscal year it reduces the overall expense for the category
in question for the fiscal year in question.

When the refund comes in the following fiscal year I look to
when it is received. If it is received before the tax
return is filed I generate the accrual entries necessary to
deal with it in the year the expense arose, then treat the
payment as a reduction of a receivable. If it is received
after the return is filed, I treat it as miscellaneous
income.

Gene E. Utterback, EA

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~But my question concerns a large expense (escrow for the use
~of a city park) that we received a refund for in the
~following fiscal year of my NPO organization. If I follow
~the suggested answer, I will find a large negative expense
~at the following year end when I produce my Income/Expense
~reports. If I credit an income category (Called, say,
~"Clothes Returns" in this category), I'll see a positive
~number in an income category which is how I am deposting the
~received refund check.

This sounds less like an expense and more like a security
deposit. If so, I think the escrow should have been treated
as a current asset rather than an expense. Then the refund
merely reduces the asset back to zero.

Tom

--
Thomas E Healy, CPA, PC
1650 38th St., Ste 202W
Boulder, CO 80301
Please send email to: tom[at]tomhealycpa.com, since I block all email at my
newsgroup address.
phone (303) 443-1804
fax (720) 489-3772

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Hope this isn't too far afield from this group. But I have
a personal interest in the group's opinion of the following
question that was raised in the Quicken USENET group:

"Question.....

Say you buy a fairly expensive item in the month or
March..... say maybe $200 worth of clothes. And naturally
you record the expense under a category called "clothes"

However..... suppose you dislike the clothes or maybe they
don't fit right and your return them for a refund in April

Do you credit the "clothes" category for the $200 you got
back.....not putting the clothes category in a negative
number?

Or do you record the refund as a form of income?

I've been recording the refund in my clothes category.....
but then it makes my expense reports goofy as sometimes I
have negative balances in the category since the purchase
and refund were in two different months

What do YOU do for such transactions?"

The answer supplied was the following:

"Yes. To use more general bookkeeping terms, you are
crediting the expense account, effectively undoing the
original purchase transaction.¹

Footnotes:
¹ http://www.dwmbeancounter.com/tutorial/lesson03.html

But my question concerns a large expense (escrow for the use
of a city park) that we received a refund for in the
following fiscal year of my NPO organization. If I follow
the suggested answer, I will find a large negative expense
at the following year end when I produce my Income/Expense
reports. If I credit an income category (Called, say,
"Clothes Returns" in this category), I'll see a positive
number in an income category which is how I am deposting the
received refund check.

Any suggestions out here on the correct way to account for
this even if it falls across a fiscal year?

--
Regards -

- Andrew

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