My church balance sheet has 3 accounts under cash reserve (called reserve fund), e.g., reserved for roofing, pavement reserve, etc. The previous preparer told me that the balance of the reserve accounts cannot be changed, so the balance has always remained the same amount, e.g., $4,000, but the bank account balance is $1,000. In order to recon to bank account balance, there is another item ($-3,000) used to arrive at the ending balance of $1,000.
Can any one help me to understand whether the reserve accounts have to be stated $4,000 every year, and then make a negative adjustment to match the bank balance? How should accounting be done for the reserve fund?