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Shouldn't Transfers Between Accounts Balance Out? (Q Mac)

KenC

At the bottom of a Category Summary (report), there's a section called Other Transactions, and it shows Transfers Between Accounts. When the transactions do balance out to zero, shouldn't the category also show $0.00? See attached screenshot. These are common micro deposits.

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jacobs

I don't fully understand the snippet of the report you've shown. It shows a 29¢ and 15¢ transaction, the sum of which is 44¢. But all the transactions are positive numbers; it seems the 44¢ should be the opposite sign of the other two. And are these actual transfer transactions between two accounts? I'm familiar with financial institutions doing a micro-deposit and then withdrawing it, but I haven't experience a micro-transfer where money is deposited in one and pulled from the other. So if you could clarify more about these transactions, it might help.

Also, if you are using the old Category Summary report — under Reports > Other Reports > Category Summary — stop. It's an old report from the predecessor program code, and it's known to have some data retrieval errors. Instead, use the Summary of Transaction reports; you can get the same report selecting the accounts, categories, etc. that you want. That might solve your problem… or another one down the road.

One other issue, although I don't think it's involved here, is to make sure you don't have any transfer transactions which also have categories; transfers between accounts should be only transfers, and they can't also be income or expense. If you have transfers with categories, that could cause a problem in reports.

(There could also be an issue with which accounts are included in the report and the setting for that in the Advanced tab, but I don't think that's likely the issue here.)

Jon

I'm pretty sure that @KenC is using the old Category Summary report, since the newer ones don't list Transfers like that. And the reason transfers on the old report don't balance to zero is that it only lists each transfer once - if I pay a credit card bill from my CMA, I only see one transaction showing the money going from the CMA to the credit card. So it cannot balance out to zero, and I don't think it's intended to.

The new Category Summary reports also have a transfer section but they don't list individual transactions, just the total amounts that flowed out of and into each account, so it does balance out to zero (assuming all the accounts involved in the transfers were included in the report).

(It's possible that if you use the Transfer: Credit Card Payment category & that shows up in the Transfers section then it might not balance out to zero; I don't use that so I don't know how it affects the Transfers section of the report.)

KenC

Indeed, omitting the category (I had picked an arbitrary one anyway), allowed the transfers to zero out. Now they don't even appear in the bottom section. I suppose it doesn't help to track micro deposits anyway in summaries and reports. However, some micro deposits such as to/from eBay are definitely not transfers (between my accounts), so I do assign those the category of "bank charge" instead of leaving them uncategorized. They appear at the bottom section just the same but in a Neutral Category with total zero, which is what seems more correct to me.

On a side note, only by assigning category to many transfers can I track them. Otherwise, leaving many of them without category would require creating a lot of duplicate transactions just for reports and summaries.

As for using Summary instead of Other Reports, I've now tried creating an equivalent for comparison. I picked the same accounts and categories. The oddity is that my self-employed income category gets listed under Expenses instead of Income. The name of category is the name of my business. Subcategories for Gross Sales, Advertising, Office Expenses, etc. So total income is wrong. Total expenses wrong.

The worst thing in this column-row format is that there's no Net Total for quick glance of my ongoing savings or difference between Income and Expense. It doesn't help when I do my tax return. The bottom line "Total" is just not correct — it combines all the transfers.

jacobs

On a side note, only by assigning category to many transfers can I track them. Otherwise, leaving many of them without category would require creating a lot of duplicate transactions just for reports and summaries.

@KenC If it works for you, okay… at least for the time being. But such a transaction violates the rules of accounting, and the developers have previously said they will at some point close the existing loophole which allows such transactions to be created. And as a purely practical matter, such transactions can appear incorrectly in reports, which aren't designed for transactions which have both transfers and categories. So although it seems to work okay for you for now, you might want to come up with a different methodology for recording the transactions you're doing this way.

Some background, if you're interested… In accounting, there are assets, liabilities, income and expenses, and a transaction can move money between any two. In standard accounting programs, assets, liabilities, income and expenses are all "accounts", and every transaction consists of an equal and opposite amount, a debit and a credit, for any two accounts — what is known as double-entry bookkeeping. For instance, a purchase typically reduces cash and increases an expense; a purchase could also reduce cash and increase an asset; a deposit could increase cash and increase income, or increase cash and decrease a liability. In Quicken, assets and liabilities are called "accounts" so they are reflections of real-world bank, credit card, loan, etc. accounts, while income and expenses are represented by categories. Still, the fundamental rules of accounting exist: money can move between two accounts as a transfer transaction — such as a payment from checking to a credit card; or money can move between an asset/liability and an income/expense as a categorized transaction — such as a credit card purchase of groceries which increases the credit card liability account and increases groceries expense. But creating a transaction which affects two accounts and a category isn't a valid accounting transaction, which is why the developers have said it will go away at some point.

So why does this even exist in Quicken? It goes back to the 2010-era Quicken Essentials program, the first release of the re-written Quicken for Macintosh. That program was incomplete and very limited, which led many Mac users not to use it; it wasn't until it was revamped and released in 2014 as Quicken for Mac that we got a more feature-complete program, which has continued to evolve and improve over the past decade. In the original Quicken Essentials, there were no investment accounts, and reports could not include transfers, so the code allowed the transfer + category transaction. Over time, the reports and budget features were built out, and capabilities were added to allow users to optionally include transfers for cash-flow purposes; the intent of the developers was to then remove the flawed transfer + category transaction capability. This is what the former Quicken Mac product manager said a few years ago:

Our leadership team has decided that categories on transfers violates core accounting principals that our products should be based on and we are slowly removing this functionality from the Mac… This decision was made at the highest levels of our company so it's not going to be revisited.

I don't know why this has remained on the back burner for so long; I imagine they haven't implemented it fully yet because it's a change that impacts a number of parts of the code, and they need to insure that their implementation won't ruin the records of people who have been doing transactions this way for years.

Sorry if that was too much information! I just didn't want to write "you shouldn't do it that way" without an explanation. 😉

As for using Summary instead of Other Reports, I've now tried creating an equivalent for comparison. I picked the same accounts and categories. The oddity is that my self-employed income category gets listed under Expenses instead of Income. The name of category is the name of my business. Subcategories for Gross Sales, Advertising, Office Expenses, etc. So total income is wrong.

Hold on a second. You said the category for income contains sub-categories for expenses, so something is wrong. You need to have two different main categories, one for income and one for expenses. You can't have expense sub-categories of an income main category. I'd guess that if you go to Window > Categories and look at the category with your business name, it shows the Type is Expense. You should create a separate category for your business income. If you want a profit-and-loss report for your business, you can easily create that to include both the income and expense categories specific to the business.

The worst thing in this column-row format is that there's no Net Total for quick glance of my ongoing savings or difference between Income and Expense. It doesn't help when I do my tax return. The bottom line "Total" is just not correct — it combines all the transfers.

A Transactions by Category or Summary by Category report does include a total at the bottom. If you want true net income, then such a report should not include any transfers, only income and expenses. Since you've been entering transfer transactions with categories, this might be part of the problem I mentioned above. I'm not sure which accounts you're transferring to, but if you want to include transfers in a category report, and you include all accounts, then it makes sense that the transfers cancel out, because your report includes the money going out of one account and the opposite amount of money going into the other account. In reports, on the Advanced tab, you can have it include only transfer with accounts "outside" — not included in — the report. So depending what accounts are involved, you'd want to see if you can exclude the account(s) on one side of the transfer, so that the transfers included in the reports are for only one half of the transfer transaction.

You also mention here "savings", and I'm not sure how savings would be something for your tax return. Is this money you've moved into a savings account? Or do you mean net profit for the business? If you explain in a little more detail what savings you're wanting to see in a report, we can hopefully guide you to how to achieve that.

KenC

@jacobs, your points are well taken.

I've cleaned up nearly all redundant categories on transfers. And indeed, nothing is broken in my reports, tracking, account views. The lower sections in my annual reports (except for 2021 and earlier, weird) are now clean. This fully explains my original question.

As for my using category and subcategories for my entire self-employed business, wow. I hear you. But I think I'm stuck with it, having done it this way for over 27 years. I know Quicken offers full-fledged business accounting software to fully separate things, but I don't need it.

Looking over my 1997, for example, I had many other sources of income to track. This was why and where it started. Then, over time, it became just one main business — and one Quicken category. Certainly wouldn't work if I had employees.

Now also I went into edit Categories and changed it to income (not expense), but the subcategories cannot be changed back to expense. In Edit/Advanced, I've clicked Exclude all transfers, and now the new Summary shows same items and values as my old summary. Bottom Total is now same as my Net Total. All good.

However, the new look takes many windows, resizing of windows, extra clicks here and there just to glance at values. There's no red to highlight money out. The interval tab is handy but I find no advantage because some of expenditures are huge only to be balanced out later in the year. So it's just one column for one interval year, making the report simplistic yet burdened by the many clicks.

I suppose it just takes some getting used to.

Funny thing is that I'll be retiring this year or next. All my wrong categories and weird approaches will be put to rest for good! Well, maybe I'll need new categories for SS and Medicare. Just kidding. New accounts not categories!

The basic purpose for me is simply to know by quick glance how I'm doing across all my banks, brokerages, assets, etc — the difference between money out and money in. This is still why my old reports are handy.

Thank you for the master class though. I learned a lot.