What is a “donor restriction”?
A donor restriction is a request by a donor to a non-profit organization to direct the contribution for a specific use for a specific time, or indefinitely. The rule of receiving a tax deduction for a contribution, is that the money must be surrendered to the organization and not directed.

By allowing donor restrictions, a tax-deductible contribution can be made, and the donor can request the purpose for which the money is used.

How do you split one real bank account into two (or more) accounts?

PowerChurch can keep track of multiple accounts on “paper” from one real bank account. The accounts in PowerChurch must have the same MAJOR ACCOUNT number. The MAJOR ACCOUNT number is the four-digit part of the account number. 01-1110-000, “1110″ is the MAJOR ACCOUNT number.

So, 01-1110-000 and 02-1110-000 (different funds) are the same physical bank account. Also, 01-1110-000 and 01-1110-001 (sub accounts) are the same physical bank account.

Where can I find PowerChurch authorized training?
A list of PowerChurch authorized trainers is found on the PowerChurch website for different seminars and trainers who are knowledgeable about the PowerChurch software, but are not employees of PowerChurch.

When is someone considered an employee?

There are several guidelines to distinguish the relationship of an employee in the church, whether they are considered to be an employee of the church, or if they can be considered to be a “1099″ contractor. (1099 refers to the tax form given to contractors, by the way).

You will need to research this topic further or purchase the tax guide by Richard Hammer. PowerChurch makes it easy to do either. You can setup an employee in the Payroll module of PowerChurch, or you can click on the “1099″ check box in the Accounts Payable module of PowerChurch.

You can also get accounting training, either in general accounting, non-profit accounting, or PowerChurch specific training.

How do you correct a mistake in PowerChurch?
In a double-entry accounting system, posting in Fund Accounting is akin to writing an entry in ink in the general ledger (someone, please remember what I am talking about!).

It is a permanent entry. In the general ledger, you were allowed to make a single-stroke with the pen through a mistake and make a correction entry to show the right thing.

In PowerChurch, you leave the mistake, and make a second entry to correct the mistake, and if necessary, a third entry to do the right thing. There is always a trail back to the mistake. This is a good thing. It provides a secure feeling that the information is not being arbitrarily changed.

Can you change a budget half-way through the year?
The short answer is “yes”, PowerChurch allows you modify the budget at any time. (Note: Changing a budget is not subject to the same scrutiny as changing a transaction. A budget is something that you use for convenience, and is not subject to Generally Accepted Accounting Principles).

The real question is “under what circumstances SHOULD you change your budget in the middle of the year?”. Just because you are not doing what you projected, either in income or expenses, does not necessarily mean you SHOULD change your budget. It is good to figure out WHY the numbers are not lining up with the budget. But leaving the budget the same for the entire year is sometimes a good measuring stick and forces you to ask the hard questions about WHY things are different.

However, if a physical change takes place. If you start a new church, for example, and hadn’t expected to do that within the year. Or, if a building burns down (we had that happen). Or, if a new employee comes on, or one leaves unexpectedly, then the ASSUMPTIONS have changed that you had when you made the budget. Under some circumstances, given a MAJOR change in ASSUMPTIONS, you may want to adjust your budget mid-year.

How do you setup a budget in PowerChurch?”
You may be looking around for the “Budget” option somewhere and wonder where to find it. Budgets add power to your church for planning, reporting, and accountability.

Look in the setup for the Chart of Accounts. That’s Fund Accounting / Setup / Maintain Chart of Accounts. Each account has two tabs in the lower window. A “Details” tab and a “Budget” tab.

Use the “Budget” tab to create a budget for the account.

Note: with PowerChurch version 10 and PowerChurch version 11, you can budget on assets and liabilities as well as income and expenses.

Why isn’t PowerChurch similar to Quicken or Quickbooks?”
Quicken or Quickbooks, or other similar softwares are single-entry accounting systems. They use something like a check register to make single-entry entries. The main difference is the ease where you can delete entries from the check register without any trace. Double-entry accounting systems do not allow transactions to be erased without a trace.

What is a “double-entry” accounting system?
PowerChurch is a “double-entry” accounting system. Basically, “double-entry” refers to having to make two entries for every transaction. One is a debit and one is a credit. They are opposites.

The double-entry accounting system was developed hundreds of years ago, and takes into account assets, and changes in assets, and liabilities, as well as income and expenses. It also has as a basic feature, a “general ledger” or permanent record, that cannot be changed, allowing for trustworthy record keeping.

What are the benefits of using a church accounting software like PowerChurch?”
Our church is able to maintain a rather complex, medium-sized, multi-site church, with a part-time bookkeeper thanks to PowerChurch.

I guess that sums up the advantage of using a church accounting software.

Ease of church reporting, sound financial systems, good record keeping are some others that come to mind.

What is a debit and what is a credit?
A debit is the opposite of a credit. “Debit” can be an adjective or a verb, and so can “Credit”.

As an adjective, “a debit account”, and as a verb “to debit an account”.

The debit accounts are Assets and Expenses. The credit accounts are Liabilities, Income, and Equity.

When the verb and the adjective match, the amount in the account is increases. Therefore, when you “debit” a “debit account”, the amount is increased.

When you “credit” a “debit account”, the amount is decreased. And vice versa.

See the Power Church tutorial at http://www.empoweryourchurch.com/understanding-debits-and-credits/ for more explanation.

When to start another fund in PowerChurch Plus
The rule of thumb I have used to determine whether or not an activity needs its own fund is this: Are there (many) more than income account associated with this activity, and are there (many) more than one expense account associated with this activity.

Obvious candidates for having their own accounting funds are things like missions accounts, building funds, church schools, etc.

Some activities that may need their own funds are investment accounts, summer programs, or large book ministries.

The most important test if you are unsure is the number of income and expense accounts associated with the activity.

How do I make Depreciation Entries in PowerChurch
Simple depreciation entries can be made by taking the purchase price of an item and dividing it over the number of years that it will be in use. There are some guidelines for “length of use”, but nothing written in easy-to-read language, so use good judgment, and you will be fine.

When you buy a depreciating asset, you Credit your checking account and Debit the new asset account. You also Credit an asset account called “Accumulated Depreciation” for a fraction of the item’s value. (The value of the item divided by the number of year’s of use). You Debit the expense account called “Depreciation Expense”.

Note: the “Accumulated Depreciation” asset account will always be a negative number. It subtracts from the total depreciating assets and gives you an accurate amount of assets you have on hand, less their depreciating value.

How do I add and edit envelope numbers?
Envelope numbers can be added “on the fly” in Contributions / Enter Contributions.

At the far right, in the center of the “Enter Contributions” screen is a green plus sign (PowerChurch version 11) that will open a window and allow you to enter a contributor.

The envelope number picked will be the next in the sequence. The sequence beginning can be changed under File / Preferences / Contributions Setup, in the General Tab.

An envelope number can be edited after it has been assigned by going into the Membership module / Personal Profiles / Modify Personal Profiles, on the first tab (Profile Information).

Where are the “receivables” in PowerChurch?
Power Church is based on cash accounting, not accrual accounting. You can google the two terms to see what the difference is.

The idea of keeping track of “receivables” comes with accrual accounting.

There is a module in PowerChurch called “Accounts Receivable”. This differs very little from the Contributions module, except in terminology. It has “customers” instead of envelope numbers, etc. The “billed” money in the Accounts Receivable module is recorded in the Fund Accounting module until the money is actually received by the church or organization.

There is no Fund Accounting record of how much money is due the church in Accounts Receivable, any more than the Fund Accounting module is aware of how many pledges are outstanding in Contributions.