Hi I'm new to book keeping and have done very well all financial year but I'm now at year end and it's scary! I receive funding for specific pieces of non profit work and have placed this as capital nominal code on sage (in the 3000s). This has been spent and I don't want it transferring into next years trial balance as it shouldn't be included as it's not capital for the business as such. Do I have to leave this like this or can I do a journal to transfer the funding into it's spending counterpart (set up as a direct expense in the 6000 nominal codes). If I do this after the year end has been run the funding will then be cleared and won't show for next year. Is this good practice and if there is any money left eg not all the funding has been spent what happens to the balance in that 6000 code.
Hope I've made some sense to someone. All advice gratefully received.
Firstly the funding should be treated as deffered income and as it is a liability should appear in the 2000s rather than the 3000s. When the funding is used it is an income not an expense and consequently should have nl code in the 4000s not 6000s.The journal for any used funding needs to be done before year end not after and any unused balance will remain in nl 2000s and show on the balance sheet at year end and be carried forward.
