Clearing Due To/Due From Accounts

Leanne Brown

We have had balances in our Fund 1 and Fund 3 Due To/Due From accounts for years, I think it's because we didn't understand fund accounting at first and always let the system create the interfund entries instead of entering the correct debits and credits for each fund.

Is it okay to just clear these accounts to the relevant net assets accounts? Is it that simple?

Kevin Brazell

Not necessarily. 1. If they are on the Balance sheet, then they should have balances. But all the accounts should net to zero. 2. If they are on the Income statement, then they would zero out at end of every FY and roll up into the Fund balance.

I'd recommend checking the type first and if on balance sheet, confirm they net to zero. If they do, it's operating correctly.

Leanne Brown

They are on the balance sheet and they do net to zero.