Moving cash from balance sheet to income statement......?

Question

I keep the books for a non-profit and the Director wants to move money from the checking account to the income statement to offset the deficit for the year. Is this a "proper entry" in accounting terms? I am not totally sure this can be done.

Answer 1

It can't be done.  The only way to offset a deficit on the income statement is to adjust any accruals that have been made, but the adjustments have to at least look appropriate (some back up that supports them must be done).

By the way, reducing cash in the checking account requires a credit to cash.  Any offsetting entry would have to be a debit, which would increase the deficit on the income statement.  So not only can this not be done, it wouldn't work even if you did it.