Do "categories" exist in accouniting?

Dumb question on my part but I'm only a lowly Quicken user

But do "categories" exist in true double entry accounting packages? Or are they really ALL accounts?

Example.....say in Quicken you have an expense category called "rent".

Is that category in a true double entry system really an "account" named "rent"?

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wrote

Believe it or don't, but QB is a double entry system. You just don't always have to make the other half, as the computer "thinks" it out based on how you set up the system, vendor, employee, or customer.

But yes, there really is an account named "rent" in those business accounting systems where "rent" is paid. There may be sub accounts, or departments, or.....any and every imaginable configuration every thunk up by management.

Reply to
Paul Thomas, CPA

Understand

Reason I'm asking is that maybe Quicken cant do what I want.

I want to create accounts that in fact act like miniature envelopes. This way I can create account "balances" and monitor each balance individually

Example.... I know my car insurance comes due twice a year.....and costs say $500. So I need to budget abt $90 a month into this car insurance 'account"

Then.... I want to be able to look at that account in real time and no at any moment just how much money is in there. Whether it's positive or negative.

Again.... I'm pretty dumb abt this but I'm wanting a real time "dashboard" of al my accounts and their standings

I use Quicken 99 only.... not Quickbooks

Would a real double entry accounting system be what I need to get the reports I want?

I don't know if you've ever read the book 'Your Money or Your Life".... but it advocates graphing your expenses vs interest income so that one can "project' at what point in time you will be financially independent.

This is what I want. To graph expenses vs interest income. Plus also to "look" into each "envelope" and see what value is in that envelope. The envelope being an account in the computer you see

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me

wrote

I don't have Q99, but if it allows you, create your bank account(s) and then create subsequent sub-accounts of the bank accounts. Then, you'll know that you have $2347.26 in the bank and it consists of $182.71 in your insurance account, $164.55 in your grocery account, $672.14 in your housing account, $327.86 in your utility account, $52.79 in your medical account........etc until you have accounted for every place your bank balance will be going to in the near future.

It's a huge undertaking to do so, and to keep the balances accurate over time and under time constraints.

Basically you are looking to keep your books under a fund accounting basis. How much is in that fund is how much you have to spend on that activity.

Reply to
Paul Thomas, CPA

This may be true

But I've got to develop some kind of system to manage pers money. yes?

I'm just trying to figure out what makes sense to me as far as goals and metrics to track

One thing I like abt the spreadsheet based program I mentioned early is that you basically spend the money you earn this month for NEXT month

IOW.... say you earn 2k in June.... the sheets tell you that you have 2k to spend for July. and each acct or category has a balance and you can watch it shrink as you use that money up. example...you have a budget of say 450 for coffee at local Starbucks. Each day as you buy a coffee you slowly see that $50 'consumed".

Now maybe Quicken can do all this... but its not so apparent if it can

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me

wrote

You can set that up in QuickBooks, but it's problematic and cumbersome. I don't know how easy or difficult it would be in Quicken 99. If you have software that will do what you want it to do, then buy it.

Reply to
Paul Thomas, CPA

Think of Quicken is double entry accounting with a single entry. You spend money on rent, that is the entry you post. Since all of this is happening in your check register (that is what Quicken is) the double entry would read:

Debit Rent Expense Credit Cash in Bank

When payday rolls around you deposit the money to your account as the net pay going into your checking account. This is income. The double entry would read:

Debit Cash in Bank Credit Salary Income.

Now, before you ask, that Salary Income will not equal your true earnings. You got show this in Quicken as: Salary Income Dep$1000.00 Taxes Deducted $250.00 Insur Deducted $100.00 Cash in Bank $650.00

Hope this helps clear up your questions.

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Reply to
TKnTexas

There are other responses already to this post which I didn't read in their entirety, however, they didn't appear to actually answer your question. No, accountants don't generally use "Categories" to refer to income and expense accounts. "Categories" is an Intuit made up designation for the income and expense accounts. It was created to make using Quicken less daunting for non-accounting oriented people. In the accounting world, we refer to accounts and every account is either some form of an income, expense, asset, liability or equity account. Quicken stayed away from this terminology in order to appeal to the non-accounting, non-financially oriented end user.

Reply to
San Diego CPA

I am not sure how to help you on the graphs of expenses vs interest income, but as for having a separate "envelope" to look into to see the "value" of the envelope, why don't you set up a simple Lotus/Excel spreadsheet. Depending on how many "envelopes" you have it should not be that difficult. You could easily set up a different tab for each item that you wanted to track and set up a summary sheet to see all of the accounts at one time.

Reply to
jeff.catellier

That was the answer I really wanted to know

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me

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