Operational difference between Income & Expense category types
Hello,
As we all probably know, it is possible to create the exact same category as both an Income & an Expense category type. I initially believed that this was useful in case we wanted to post transactions of both a positive and negative value into a given category - basically that the application would allocate the transaction amount into the proper type of category based on the value polarity. However, I quickly discovered this is not the case because the application does not care about the transaction type in regard to the actual amount polarity - and in retrospect, this makes complete sense.
So still wondering what functional use the category type really serves, I noticed that it might be useful in some types of reporting whereby the application can take all categories of a given type and report on those separately from the other category type. I am not sure if is accurate or if maybe there is another functional reason I am not aware of - hence this question.
Does anyone know why we have category types and what function they serve?
Thanks in advance.
Support Staff 2 Posted by Ben Spencer on 31 Mar, 2012 10:32 PM
Moneydance is a double entry bookkeeping system. Each category is in fact an account. e.g. an expense category is an expense account and an income category is an income account.
Each transaction in Moneydance is a transfer from one account to another. When you enter a transaction in your checking account and select an expense category you are really entering a transfer from the checking account to the expense account.
Expense and income accounts behave differently when you transfer to them. When you transfer a positive amount to an expense account the balance of the expense account goes up however income account behave in the opposite way. When you transfer a positive amount to an income account its balance goes down.
I hope that helps.
Sincerely
Ben Spencer
Moneyance Support
3 Posted by cyberzeus on 31 Mar, 2012 10:46 PM
Ahhh - gotcha - make sense now. So for example, when I create a new category to be used only to contain transactions used to correct balances in my other accounts, then I should use my discretion on which type to choose based on how I would like those transactions to be handled and show up in my account.
Thanks again Ben - much appreciated...