Financial Reports – Balance Sheet
It’s the end of the month. The church board is looking to you to print reports that show the financial status of the church. How is that assignment going for you? Do the words, “Balance Sheet”, “Income & Expense Statement”, “Budget Report”, “Activity Report”, or “Changes in Equity Report” make your head swim? Perhaps these report names are unfamiliar to you, and you’ve just been doing the best you can to produce good reports for the board. This month’s newsletter is the first in a series. Each month we’ll talk about a different report from PowerChurch.
There are 2 reports PowerChurch will print that make up the basic financial packet for your board. They are the “Balance Sheet” and the “Income and Expense Statement”. This month we will be talking about the “Balance Sheet”.
Let’s start with the basics. What is a “Balance Sheet”? It is a report showing the assets, liabilities and equity of your church. Let me give you common examples of each: Assets – Bank Accounts Investments Buildings/Land Equipment Vehicles Liabilities –
Payroll Taxes – amounts deducted from employee checks along with the employer liabilities
Flex Plans – amounts deducted from employee checks
Pension Plans – amounts deducted from employee checks
Vehicle Loans
Mortgage Loans Equity –
Equity is simply the total of Assets minus Liabilities. Anytime you post an amount to an income, equity will automatically be increased. Anytime
you post an amount to an expense, equity will automatically be decreased. There are few reasons you will need to post an amount directly to equity. Later in this newsletter is an example of a “Balance Sheet” for a church. This report is easy to print. Start at the gray bar at the top of your PowerChurch screen. Click on:
Accounting – then
Fund Accounting – then
Reports Fund Accounting – then
Balance Sheet
Choose the month and year
I suggest you always check “Print account numbers”
Click “OK”
Sample Church
Balance Sheet (UNAUDITED)
07/05/2013 04:19 PM Consolidated - July 2013 Current Year Page: 1 ASSETS 1000 BANK ACCOUNTS 1050 FIRST BANK #76289 1100 Budget Fund 1110 $23,125.80
Jones, Emily Memorial 1110-101 1,575.00
General Missions 1110-205 4,400.00
Camp Scholarships 1110-210 2,430.00
Building Fund 1110-405 2,328.00
Subtotal First Bank #76289 1100 33,858.80
Subtotal Bank Accounts 1050 33,858.80
FIXED ASSETS 1500
LAND 1501
3340 N University Ave 1502 25,000.00
BUILDINGS 1600
Church 1601 100,000.00
Subtotal Fixed Assets 1500 125,000.00
TOTAL ASSETS $158,858.80 LIABILITIES 2000 CURRENT LIABILITIES 2010 PAYROLL DEDUCTIONS 2201 TAXES PAYABLE 2205 Federal Withholding 2215 $1,329.77
State Taxes Payable 2220 286.88
Subtotal Taxes Payable 2205 1,616.65
Subtotal Payroll Deductions 2201 1,616.65
Subtotal Current Liabilities 2010 1,616.65
LONG-TERM LIABILITIES 2600
MORTGAGES & LOANS 2610
First Bank Mortgage #2246 2611 63,259.27
TOTAL LIABILITIES 64,875.92
NET EQUITY 3000
UNRESTRICTED 3100
Unrestricted Net Equity 3110 $83,249.88
Sample Church
Balance Sheet (UNAUDITED)
07/05/2013 04:19 PM Consolidated - July 2013
Current Year
Page: 2
General Missions 3205-205 4,400.00
Camp Scholarships 3210-210 2,430.00
Jones, Emily Memorial 3305-101 1,575.00
Building Fund 3405-405 2,328.00
Subtotal Temporarily Restricted 3201 10,733.00
TOTAL EQUITY 93,982.88
You should know what makes up every amount on your “Balance Sheet”.
Is each amount showing for banking truly what is in the bank?
Is the amount showing for the payroll liabilities truly the amount you owe the government, pension plan, flex plan, etc…?
Is the amount showing as the mortgage balance truly what you owe the bank?
If your answer to any of these questions is “no”, you need to find out where the problem is and make any needed corrections.
The church for my “Balance Sheet” example has all their money in one checking
account. They have subbed out the 1110 checking account giving each designated item a sub account of the 1110 checking account. By looking at the “Balance Sheet” in my example the board knows the 1110 checking account has $33,858.80 in the account. However, $23,125.80 of the 1110 checking account is all that should be used for paying the budgeted bills. The rest of the money in the 1110 account is set aside for designated purposes. If the amount in the “Budget Fund” line shows a negative number, the church is spending designated money to pay the Budget Fund bills. The “Balance Sheet” is a wonderful tool to help the board make important decisions regarding the church cash flow.
Along with subbing out the 1110 checking account, the church in my example has also created equity, income, and expense accounts for each designated/temporarily restricted line item. The income and expense line for each designated item is set to close to its own line item equity. That is why there is an equity amount under “NET EQUITY” for each of the designated 1110 funds.
Notice: The amount for each designated 1110 account matches the amount for each designated equity. Building Fund 1110-405 checking shows a balance of $2,328.00. The Building Fund 3405-405 equity shows the same balance of $2,328.00. The chart of accounts can be set up
in a way that will give the church an excellent check and balance system to help insure that amounts are being posted to the correct chart of account number.
Note: For more information on setting up your chart of accounts, there is a Chart of Accounts Setup webinar available on our website. The setup of your Chart of Accounts will determine how information will show on your reports.
Congratulations! You have just learned the basics of the “Balance Sheet”. Next time, we will go over the basics of the “Income and Expense” report.