(Red Deer, AB Canada)
Non profit organization.
Moving money from an investment to bank acct using $'s in a non restricted "building fund". Have Dr Bank, Cr investment acct.
Accountant has now informed me to Dr Building fund to reduce that account and Cr "Accumulated Surplus".
Would appreciate information on what is Accumulated Surplus.
I don't have any experience with the formal reporting of NPOs but here is my understanding ...
NPOs have some unique reporting requirements as you are probably aware of.
For example, as there is no profit motive involved, control of expenditures usually through budgetary controls becomes important ... as does segregating funds for restricted funds or capital funds from general funds.
It is also my understanding to accumulate funds, an application is filed with CRA requesting permission to accumulate funds.
NPOs are required to present four financial statements:a Statement of Financial Position
... equivalent to a balance sheet reports net assets instead instead of equitya Statement of Operations
... equivalent to an income statement showing how revenue and expenses have been allocateda Statement of Changes in Net Assets
... shows changes in fund balances as every thing flows through the Statement of Operationsa Statement of Cash Flows
... a break down by operating activities, investing activities and financing activities.
Your bookkeeping entry just records the movement of money between bank accounts. I believe the accountant is now asking you to record the use of the funds ... or contribution to the building fund from the general fund.
I believe that Accumulated Surplus
would be in the "equity" section (net assets section). But I'm just guessing as I don't have your Chart of Accounts.
As I said at the start, I don't have experience with the formal reporting of NPOs, just a limited understanding ... and a little knowledge about something can be dangerous.
I'm sure the Accountant would not mind explaining the entry to you ... as it helps you prepare a better set of books ... particularly if it requires you setting up a new account in your Chart of Accounts.
It's much better to ask and get the entry right the first time.