Should I use one or two categories for related transactions?

Joe Sandfort

I have a basic understanding of how categories work in Quicken, but would like advice on what is the best way to assign categories to transactions that are related to each other. I realize that this is more of a philosophical question, but would still really appreciate your thoughts. I am the volunteer Treasurer of a small nonprofit group that raises money for our local library. Our group for example, has a plant sale each year. Each year, the plant sale usually makes about $8,000 and has expenses of about $1,000. My current method is to have an income category called "Plant Sale Income" and an expense category called "Plant Sale Expenses". When I run a yearly report, Plant Sale Income appears in the Income section as $8,000 and Plant Sale Expenses appears in the Expense section as $1,000. Several Board members have asked me to have just one category called "Plant Sale " in which all transactions, both income and expenses would be entered. Their thought is that they would have to look at one entry (Plant Sale) to find out how successful the Sale was instead of having to subtract the expense entry from the income entry. Which is considered the standard practice -- the two entry or one entry system? Which system would the people in the Quicken Community use in my situation? Thank you very much for your help.

Rocket J Squirrel

Have a top-level category Plant Sale. Create 2 subcategories under it, Income & Expenses. Then when your distribute your report, it will satisfy everyone by showing both the breakdown and the net.

Rocket J Squirrel

Have a top-level category Plant Sale. Create 2 subcategories under it, Income & Expenses. Then when your distribute your report, it will satisfy everyone by showing both the breakdown and the net.

q_lurker

I would think you should get and follow advice from whomever files the IRS forms (the accountant) for the non-profit, rather than no-name internet voices. 

That being said, @Rocket J Squirrel's advice seems wise.  In following that suggestion, it would seem reasonable to setup the top level category as an Income category.   

NotACPA

BUT @Rocket J Squirrel's "Plant Sale" category would have to be designated as either an Income category or an Expense Category ... and you can't have BOTH Income & Expense sub-cats under one group category.

Rocket J Squirrel

NotACPA said:

BUT @Rocket J Squirrel's "Plant Sale" category would have to be designated as either an Income category or an Expense Category ... and you can't have BOTH Income & Expense sub-cats under one group category.

Subcategories don't have types of their own, they just inherit from their parent categories. My suggestion would simply show a negative number under Plant Sale:Expenses.

NotACPA

AAAHHH, hadn't thought of that since I have multiple Group Cats with no tax line assigned and the sub-cats have differing (but all income or expense) tax lines.

My Group Cat "Salary" would be an example.  The sub-cats for me and my wife have slightly different tax lines "W-2 Wages or Salary, self" vs. "W-2 Wages or Salary, spouse".

The Salary group has no tax line assigned ... AND no transactions.

Rocket J Squirrel

I actually do this in real life because I can never decide how I want to handle income tax refunds. I ended up making Refund (income) a subcategory of Taxes:FIT (expense) because I want to see the net tax paid.

I think the more important issue for the nonprofit is that putting Expenses as a negative number under an income category will throw off the grand totals for both income and expenses by that amount.

NotACPA

For both IRS refunds (which are infrequent) and payments, I use a "Prior Year Tax" group category that has sub-cats of "Fed Taxes" and "State Taxes".

Joe Sandfort

Thank you so much for all your help. I really appreciate your opinions and now have a lot to think about.