Quicken refuses to enter a transaction with a negative amount for a liability transfer

Rob41

Quicken for Windows, currently R52.33 (however, the problem described below is not new to this or any recent versions)

I've already talked with support about this and they were able to reproduce the problem. They confirmed that it is a limitation with the way Quicken is programmed to handle transactions that involve a Liability account. At their request, I am posting the details here since I already had it all typed out to explain to Quicken Support, so that other users with a similar situation can be aware, and ot give some impetus to prioritize a solution in upcoming product updates. Below I will give background to what I'm trying to accomplish, and steps to be able to reproduce the problem.

BACKGROUND:_______________

I give my kids allowances, but instead of giving them physical money each week, I just keep a tab of how much I "owe" them in their accumulated allowances. Then when a kid wants to spend some of his/her allowance money, I pay for the purchase, and subtract the amount from their tab. I want to use Quicken to keep track of how much overall I am in "debt" to my kids in the form of this unspent Allowance money. So, I created a Liability account called "Held for Kids" (because it's money that I'm "holding" for the kids until they want to use it). And I have an expense category called "Allowances" to account for this weekly expense in my budget. So each week I want an auto-entered transaction that will both a) charge the weekly allowances amount to my Allowances expense category, and b) add the same amount to my debt in the "Held for Kids" liability account.

I first tried setting this up as a simple recurring transaction in the "Held for Kids" liability account itself. The problem with that is that the "Spending" tab in Quicken ignores transactions in Liability account, apparently, so my "Allowances" category does not show up at all on the Spending tab, giving an incomplete picture of my expenses.

I found that I could enter the transaction in my Cash account as a zero-sum split transaction, where I use a Split to simultaneously register the expense in the Allowances expense category and increase the total in my "Held for Kids" liability at the same time. Entering the Allowances expense as a negative number and the "Held for Kids" transfer as a positive number accomplishes this, and the two amounts total zero, thus having no impact on the balance in my Cash account.

This works as intended when I manually enter the transaction in the Cash account. But when I set up this exact same transaction as a recurring reminder (to be auto-entered, or to be entered from the Bill and Income Reminders window), then whenever Quicken enters the transaction, it switches the +/- values on the two lines in the Split, resulting in the opposite behavior from what I intended.

STEPS TO REPRODUCE:______________

What you'll need in Quicken:

• A Cash account
• Any expense category (in my case this is called "Allowances")
• A Liability/debt account (in my case this is called "Held for Kids")

1. Tools --> Manage Bill and Income Reminders
2. Add --> Bill --> Manual Bill
3. Pay to: "TEST" (or whatever you want to call it)
4. For "Due next on" change the date to tomorrow's date.
5. Leave "Amount" at 0.00
6. From account: Cash Account
7. Details: click "+ Add category, tag or memo"
8. Next to Category, click the Split button (two arrows)
9. In the Split Transaction window, set it up like this, where "X" is any number you choose (but make sure X is the same for both rows, the only difference being that the first is negative and the second is positive):
   1. Category: (your expense category), Amount: -X (negative X)
   2. Category: [your Liability account], Amount: X (positive X)
10. Click "OK" on the Split Transaction window, and then "OK" again on the window where you clicked the Split (two arrows) button.
11. Click "Done"
12. In the Bill and Income Reminders window, the list refreshes and your new "TEST" reminder (or whatever you called it) is listed at the top of the list now.
13. Click the "Enter" button at the right end of the row for the new TEST reminder.
14. In the Enter Expense Transaction window, click the "Enter Transaction" button.
15. Go to your Cash account where the transaction was entered. Check the split amounts on the newly entered TEST transaction. If I'm right, what you'll see is:
    1. Category: (your expense category), Amount: X (positive X)
    2. Category: [your Liability account], Amount: -X (negative X)

Note that the entered amounts have reversed polarity from what you tried to set up.

You set up:
- Expense category
+ Liability account

Quicken entered it as:
+ Expense category
- Liability account

Tom Young

Simply change the split "signs" and it will work:

When entering a "bill" if you want to show an expense properly then the expense amount is positive, an increase in the expense. Starting out your split with a negative number turns things around.

Rob41

Oh my word, you're right @Tom Young. Thank you! I don't have a way to flag the Quicken support rep who worked with me on this today but hopefully someone there will see this.

On the one hand it's nice that the solution is so easily implementable.

One the other hand, it still feels wrong that to get a transaction with negative expense and positive liability transfer to be automatically entered correctly, you have to set it up the literal polar opposite to how it is going to look in the register.

For those tuning in from home, here is the takeaway…

To get a Reminder-based transaction that looks like this in your register:

…you have to set it up like this in your Reminders:

So I still hope the Quicken developers give this some thought because there's gotta be a way to make this particular issue more intuitive, or add some explanation, or something. Maybe a preview of what your Reminder transaction will look like once it's in the register or something?

Tom Young

Understand that if you simply enter a single "payment" in the Register, you enter it as a positive number. Quicken, knowing it's a payment (and assuming you used a Category listed as an expense) lists it in an Income and Expense Report as a "positive" number, but"knows" that it gets subtracted from the income listed above on the report in coming to a net income or expense.

In accounting terms the allowance expense is a "debit" - which increases the expense - and the offset to the liability Account is a "credit" - which increases the balance in the liability Account. Every accounting entry, even entries with multiple splits, observes the accounting rule "debits must equal credits."

You made your entry in the Register in the "Spend" or "Payment" column and if you actually handed the kids their allowances out of that Account you'd simply enter the sum of their allowances as a positive number. The payment of the allowances is still a "debit" and the entry under the Spend or Payment column is the offsetting "credit", reducing your cash balance.

So all entries you make in your registers in either column are entered as positive numbers and Quicken handles the behind the scenes accounting for you based on the Category or Account you enter in the "Category" box.

The same logic works with splits. If you enter an amount in the Spend or Payment column, entered as a positive number, and then split that amount, positive numbers are "debits" and negative number are "credits." If you enter an amount in the Receive or Deposit column, entered as a positive number, and then split that amount, positive numbers are "credits" and negative number are "debits." You flipped the script with your original entry by entering $0 in the Spend or Payment but then making the expense a negative number, changing a debit into a credit for the expense.

Play around with a few test entries in a Register and you'll get the hang of it.

Rob41

Thanks, Tom. I can see that concept in simpler transactions, and I think I follow the reasoning of why it is the way it is in a split transaction like this.

What I still don't understand is not so much the accounting of it, but just the mechanics in Quicken — why I have to enter it one way to get the intended result when entering it directly into the register (-Expense, +Liability), but I have to enter it in reverse (+Expense, -Liability) when scheduling a reminder in order for it to get entered into the register as (-Expense, +Liability).

Or, to illustrate using the two screenshots in my previous comment in this thread — if we call those two screenshots A and B, respectively —

- When entering the transaction directly into the register, if you enter A you get A.
- When entering the transaction as a reminder, if you enter A you get B in your register, but if you enter B you get A in your register.

Apologies if your explanation already addressed that from a Quicken-mechanics perspective and I just didn't quite keep up. Even if there is a solid reason Quicken needs the mechanics to be the way they are in this scenario, it might be nice if it can give a heads up when setting up the reminder that the way the transaction will appear in the register will differ from the way it is being set up in the reminder.

Tom Young

"What I still don't understand is not so much the accounting of it, but just the mechanics in Quicken — why I have to enter it one way to get the intended result when entering it directly into the register (-Expense, +Liability), but I have to enter it in reverse (+Expense, -Liability) when scheduling a reminder in order for it to get entered into the register as (-Expense, +Liability). "

I just realized that my "test" file's Registers, unlike my real file, has the column "Amount", (you can see it in the picture of my first post) and I expect that's the source of confusion here. In my real file that column doesn't exist; I only make entries in the "Payment" or "Deposit" columns, so that's my point of reference, and when I made my example entry I didn't even notice the Amount column, I simply started with "$0" in the Payment column.

I can't remember if that Amount column has always existed in Quicken (I started using Quicken in it's early DOS versions) but I went back into my test file and figured out that I can use that Amount column to make my entries, and that IF I use the Amount I have to make entries for expenses as negative numbers. I'm guessing that you do use the Amount column for your entries?

If that's the case then eliminate that Amount column from your registers and make your entries using the Spend/Payment and Receive/Deposit columns. You'll normally enter positive numbers in those columns and your splits will use the same logic of a positive number always taking on the attribute (debit or credit) depending on which column you used to start the entry.