How to reverse out Opening Deferred Income Balances
This article is for churches and charities that account on an accruals basis.
What is Deferred Income?
If you create accounts on an accruals basis, then at the end of the previous financial year, you will need to add deferred income adjustments for any income that relates to the following financial year, but that was received in that financial year.
At year-end, these will be shown as part of the 'creditors' on your balance sheet. A typical example is where income for an event has been received, but the event isn't taking place until the following financial year.
Note: only transactions of material value need to be recorded as a deferral in your prior year accounts. You can read more about materiality in this blog article.
How to enter Opening Deferred Income Balances
When setting up ExpensePlus, you will need to set up your opening fund balances. As part of one of these steps, you will be asked to allocate your opening deferred income balance to the different funds this relates to.
Don't worry if you don't have these figures just yet - you can set up your opening balances later.
How to reverse your Opening Deferred Income Balances
Within the Adjustment screen, in the 'Manual Creditors & Debtors Adjustments' section, click on 'Deferred Income':
Good to know: The warning triangle in the 'deferred income' row of the table indicates that the opening balances for this creditor haven't been fully reversed.
If you have deferrals in multiple funds, you might find it helpful to first select the fund.
Next, click the 'reversal' button to the right of the opening balance line as shown below.
Note: you can do this multiple times, so if your deferral total is made up of different income amounts that relate to different expenditure categories, this isn't an issue.
When reversing out an opening balance deferral, you will be asked to select a date (this is the date the expenditure will appear within your current financial year). Often, the first day of the financial year is selected.
Note: it's important that your opening deferred income is reversed against the funds they were allocated to in your opening balance (which is why we recommend doing this process 'per fund'). If not, your unreversed opening balance for all funds may well be zero, but not zero for each individual fund.
To help you better understand the Adjustments module as a whole, please visit the module overview page here.