categories

When you create a category, you designate if it is an expense item or an income item. You can use the same category name for each - 1 for income & 1 for expense.

On the related note question - I have no clue! Jim M.

So two identically named categories. one an expense, one an income item? Is this the best practice? Does anyone else have another idea?

(Thanks for the response, Jim)

For example, I for one have a 'Gift Income' and a 'Gift Expense' category to deal with this. Alas, I fear the balance in the former would be less than the negative balance in the latter. Sigh. (Perhaps it is better to give than to receive.)

(btw, as a slight aside, I maintain the books for a small NPO. In my categories for that organization, I actually use "(I)" and "(E)" (eg: "Activity Fees (I)") so that in a cash flow report, I can quickly scan down to ensure that I credited a transaction correctly as a income or expense transaction. I have to prepare an IRS report each fiscal year, and this way I can ensure myself that the bottom lines at least contain their correct categorization. For personal use, this might be over extreme, but just a thought.)

That would make it *one* category - the same category can have both income and expense items associated with it.

hmmm.. i'm not sure i know how to set that up and use it.

In the register, you can associate either a deposit *or* an expense with

*any* category, regardless of whether that category is defined for inflow or outflow. (I don't use H&B, but that's how it is in Q2005P.)

If done as I suggested, you would have 2 categories - 1 for income & 1 for expense The one set up for income would show up on your P&L (cash flow) as income The one set up for expense would show up on your P&: (cash flow) as expense

Yes, you can enter transactions as a payment or a deposit to any category in your register but that is not what he wants. If you do that, you are defeating the purpose.

Set it up as I suggested Use it as I suggested Try it. Delete it all if that is not what you want! Practice makes perfect (almost) Jim M.

You can, but if you do, that single category will always print in only one section of a report; either the Income section of the Expense section, whichever you chose when you created the category.

If op wants to see income transactions in the Income section of reports and expense transactions in the Expense section of reports ... op needs two categories. But both can have the same name.

Thanks!

Yes, I realize that and agree. I was just trying to highlight a functional detail that was not evident to me when I started with categories, and, I thought, might not be clear to the op or others.

There are instances where I use the same category for inflow and outflow - ie. when double entry bookeeping is not important to me. Example: covering a shared meal on my credit card, then receiving partial reimbursement in cash. (For my purposes, a brief memo notation suffices to link the two transactions.)

-Ron

Hi, Jay.

It's always easier to combine two categories than to split a single category into two later. If you have one category for "Stock Photo Revenue" and another for "Stock Photo Costs", then you can easily subtract costs from revenues to find your gross profit. But if you put both purchases and sales into a single category, it's not easy to figure out how much you sold and how much they cost you.

It's important for you, as the manager, to know how much you sold, as well as how much profit you made. How else will you know if your business is growing or improving? Sales of $1,000 less $900 in costs this year would leave $100 if you used a single category. Sales of $2,000 less costs of $1,900 next year would also leave $100 - but that would obscure the important management insights that your sales doubled but you made only half as much gross profit as a percent of sales!

The IRS also wants to see your revenue and cost numbers, not just the net.

Depending on the way you do business, it might be important to recognize the distinction between "costs" and "expenses". If you found a good buy on stock photos and bought a stockpile of them, you might not sell them all before year-end. In that case, you might need to take inventory and deduct only the cost of those that were no longer available for sale next year. This might turn on the subtle question of whether you "sell stock photos" or "use stock photos in the business of selling your design services".

Do you have a CPA or other accountant with whom you can discuss this and other management questions? If this is just a hobby, it might not be important. But, since you are using H&B and you want to know your profit margin, I assume you are quite serious about this. Some competent advice might be very helpful. Better, more coherent advice than you can get, one topic at a time, in a newsgroup. You've just started thinking about these questions; accountants have been thinking about them for centuries and have figured out a lot of answers. There's no need for you to try to reinvent all these wheels. ;^}

RC