Accounting Talk

TomYoung · Guest

(I posted this problem over in the Quicken forums. Figured out a fix
for the problem without understanding the cause of the problem in the
first place, and posted that, too. Both posts are reproduced below
and maybe somebody over here can enlighten me.)

1ST POST
This is very strange. On June 23, 2008 I deposited a $6.05 check from
the State of California (Franchise Tax Board) into an investment
account. The transaction was split between State Tax Expense (a
reduction) and Interest Income (an increase).

In accountant-speak the transaction is:

Debit Cash $6.05
Credit State Tax Expense $6.00
Credit Interest Income $ .05

If I run an Account Balances report as of 6/30/2008 that "includes
unrealized gains" then the report shows that account properly stated.
That is, the balance in the report agrees to the penny to the "Market
Value" column total for that account's Portfolio View as of 6/30/2008.

However, if I run an Account Balances report as of 6/30/2008 that
excludes realized gains then the report shows that account
improperly. That is, the balance in the report is off (less than) the
"Cost Basis" column total for that account's Portfolio View as of
6/30/2008 by $6.05.

I've deleted the entry and re-entered it, I've validated the file, but
nothing has changed. This isn't proper behavior on the part of
Quicken, but I don't have any idea how to correct it.

Any thought?

Tom Young

2ND POST
Well, I found out *what* was causing the problem, though I don't
understand the *why*. I'm going to put it down to a Quicken
programming error, though maybe Quicken Matt would like to come in to
clear up my confusion.

What was causing the error? The fact that I was splitting the
transaction!!! I know, doesn't make a lick of sense, but that seemed
to be the issue. So, what I ended up doing was eliminating the split
and posting the full $6.05 refund to State Taxes:

Debit Cash $6.05
Credit State Tax Expense $6.05

That got the deposit to show up in the Account Balances report
(excluding unrealized gains) properly, i.e., the amount in the report
and the total of the Cost Basis column as of 6/30/2008 agreed, at the
cost of miss-stating the income and expense report.

To get around this I posted a $0 transaction to the investment account
and then *split* it, reducing the refund going to State Tax Expense by
$.05 and increasing Interest Income by $.05:

Debit Cash $0.00
Debit State Tax Expense $.05
Credit Interest Income $.05

As far as I know this transaction *doesn't* show up in Quicken's
rendition of the balance sheet either, but since it's a $0 entry as
far as the balance sheet goes it really doesn't matter.

Never a dull moment with Quicken!

Tom Young