Occasionally, you may need to transfer money from one fund to another, either because of a reorganization or in order to correct a prior mistake. This kind of transfer should be achieved by creating journal entry in the General Journal.
This process should not be confused with bank transfers, in which money stays in the same fund but is allocated to a different function.
Every transfer between funds will affect at least four accounts. This is because every fund is self-balancing; each fund in the transaction must be debited and credited in equal amounts.
For example, a very simple transaction might look like this:
This transfer might occur because an expense was accidentally debited in fund 10 (and consequently credited fund 10’s assets) but should have been debited to fund 20 (and consequently credited fund 20’s assets). This transfer reverses the mistake in fund 10 by debiting the asset and crediting the expense, and then it applies the correct credit to fund 20’s assets and debit to fund 20’s expenses.
To enter a journal entry to transfer money between funds:
- Go to Financials Main > General Ledger > General Journal
- Click the blue plus sign in the top right corner
- Create Journal Entry
- Enter required fields for this entry
- Use the blue plus sign to create as many additional rows as needed
- Save