Money received from a loan or insurance should be treated as In/Out. We recommend adding a new expense account and internal account specifically for this money, especially for large amounts. These new accounts will be used when depositing this money or when you spend the money.
In the example below, the new expense account is called Loan Proceeds. When you deposit the money into the checking account, use an expense credit deposit. When writing a check, you will use the exact same expense and internal account. See the example transactions below.
- It is not recommended that you post loan or insurance money into your contributions. This money is not a contribution to the church and therefore should not be treated as such.
- If you have not used all of the proceeds from the loan or insurance by the end of your fiscal year, you will need to make an adjustment entry at the end of the fiscal year. Please see the link below.
- When paying off a loan, you should use a different expense account than the account used above for the loan proceeds. Accounts like "Church Mortgage" or "Remodeling Loan" would be common account names used for paying off the loan.