How can we best exclude certain transactions from the income statement even though they are expenses paid through cheqing and treat the.as reserve fund expenses?

Hi Larrlbr

Reserve fund accounting is a little different than the usual, as you mention.

Because the reserve is an investment by the owners, it is not recorded as a revenue on the Expenses and Revenues statement, but is recorded as a deposit to the Reserve Bank Account, and an Addition to the Reserve Fund under Owner Capital on the Balance Sheet.

Similarly, when spending money from the Reserve Fund, you credit the Reserve Bank Account, and Debit the Reserve Fund under Owner Capital on the Balance Sheet.  Remember to add notes, categories, or Memos to the transaction so when you run your reserve statements later you can see where the money went.

Hope this helps!