How the “due to / due from” Works in Fund Accounting
In last weeks blog we covered the Basic Double-Entry Principle and now we are going to explore how this idea relates to “due to / due from” in FUND accounting. We create these funds to keep all transactions in balance between one fund and another automatically.
Example Situation:
The user wants to enter in some bills after he received money from a revenue source. He has to use this money to pay two different Funds (100-200). The 100 Fund is the general administration fund.
He enters the bills as follows:
Please notice we have many 200 Fund’s accounts that will be transferred. Notice in the next illustration, the “Print-Edit” report; that it looks like what we just entered.
In the above example there is NO opposing account to balance any of the accounts in 100-200 Funds. This would only balance the entries you are making. This is very much how “unrestricted funds” work. The software allows posting across funds, but the Funds will NOT be balanced. You would have to make entries manually, or use “Due to / Due from” accounting.
Because we have transfers between multiple accounts we will use the “due to / from” accounting.
We see the individual funds are now balanced. The debits and credits equal.
In the Audit trail, take notice of the two due to / from account and how they balance each other with the same totals.
One is set up as the Debit, and the other, the Credit or opposing account. And finally see how the expenses are set to the Revenue/expense report for all Funds:
You can see the advantage of using the “due to / due from” accounting if you want to set it up to individually balance the funds automatically.
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