Do I need to categorize a balance adjustment?

I recently installed Quicken and cleaned up uncategorized transactions. I then set about reconciling our banking accounts. The reconciliation created uncategorized transactions. I then created an account to hold our internal transfers and balance adjustments. Doing so changed the formerly reconciled banking account balances. Should I just leave the balance adjustments as uncategorized?

Answers

  • UKR
    UKR SuperUser ✭✭✭✭✭
    If this was my data file, I'd try to figure out why balance adjustments are needed in the first place.
    When comparing your Quicken account registers to the bank statements, what transactions are missing, incorrect or duplicated?
    Each account register starts with an Opening Balance transaction. Make sure that this transaction
    - always is the oldest transaction by Date
    - occurs only once in your register
    - its amount matches the bank statement balance shown on that day
    - if you owe money in a credit card account, the Opening Balance transaction as shown in the register must be a negative amount, e.g., $-123.45
    - the transaction is marked "R"(reconciled) in the "Clr" column
    - uses the same account name, surrounded by [square brackets], as Category as the account it's in (e.g., Opening Balance transaction in your MyChecking account has Category = [MyChecking])

    If the Opening Balance isn't correct, your register balance on any given day will never match the bank's balance on the same date and your register will never reconcile correctly.

    * that's called a "transfer back into the same account" and is OK. Quicken uses this method to establish the Opening Balance without making it appear as an Income or Expense in any views or reports.

    If you do decide to make or keep Balance Adjustments, they should be categorized same as the Opening Balance Transaction.

    Transfer transactions between accounts (e.g., transfer Checking to Savings) should categorized using the account register name of the transfer to/from account, e.g., in register My Checking, a transfer to My Savings is categorized [My Savings]. This will create a linked pair of transactions, one in My Checking and the other one in My Savings. Uncategorized or incorrectly categorized unlinked transfers need to be fixed or deleted.

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