If one department in your church purchases something but another department uses it, you can perform a transaction to transfer that amount from one cost center to the other so that the departments’ budgets remain accurate.
To do this, you use a transit account. This is a special interim account used to record internal fund transfers and ensure that all transactions are traceable and no ambiguities arise.
In this article, we’ll explain exactly how this works using an example, so you can easily understand it and implement it in your ChurchTools.
In our example, coffee was purchased for the congregation’s coffee bar. Some of this coffee was then taken from the coffee bar by the small groups ministry and used for a leaders’ seminar. The coffee bar and small groups ministries have their own budgets, so a transfer between cost centers is necessary. The coffee bar has both a revenue account and an expense account.
The total amount of the purchase was posted as an expense for the coffee bar to the ” Coffee Bar ” cost center (1).
Next is the first booking for the cash transit: The subtotal for the coffee consumed by the small groups was recorded as an expense for the small groups, charged to the cash transit account and allocated to the “Small Groups” cost center (2).
With the second booking for the cash transit, the subtotal for the coffee consumed by the small group department was posted from the cash transit account as revenue for the coffee bar to the coffee bar cost center (2).
If you post the transaction this way in such a case, you will reconcile the transit account and ensure that the flow of funds remains traceable.