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

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.)

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.