[moneydance] A charity account

[Michael Casteel]

On 10/28/07, Yehudit Winiarz <ym.design1 at gmail.com> wrote:
> Charity (#2) or CHARITY (#3) category/liability. I have not figured a way to
> correctly reflect my deposits into the charity bank account as an
> increasein liability. Which category/account should it be listed under
> to reflect
> the true situation?

Here is one way to remove the funds moved to the charity bank account
from your net worth. It uses a new expense account (category) I call
charity/future, which you would need to create.

1. Make an entry to move the funds from your normal checking account
to your charity/checking account. This will track the bank balances
for you.

2. Make an entry increasing your Charity/future category and
increasing your Charity/liability

This is analogous to the common practice of recording business
expenses against an 'accounts payable' liability. An increase in an
expense account charity/prepaid) is balanced by an increase in a
liability account, charity/liability (or a decrease in an asset
account, if you are paying the expense directly, say from the checking
account).

More fancy footwork comes when you write the check from the
charity/checking account to the actual charity. You need to reduce the
charity/checking account to match the bank statement, but you also
want to reduce the charity/liability to keep your net worth report
correct.

If you want to use a charity/donations category to track the tax
deduction, you could record the check from charity/checking using a
charity/donations expense account. Entries in the latter account would
then represent tax deductions, at least in the US. To correct the net
worth, you would also have to make another entry to reduce the
charity/liability, now that you have actually disposed of the asset.
You could make a reverse entry to charity/future to decrease both it
and the charity/liability.

Or, more simply, you could make a single entry applying the check from
the charity/checking account against the charity/liability directly.
Just like a business would when cutting a check from 'accounts
payable'. This is the entry you want to report for the tax return.
-- 
Mike Casteel                                        Seattle, WA