Household Inventory as asset account

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alkaprose

14 Jan, 2022 12:14 AM

https://infinitekind.tenderapp.com/kb/accounts-and-categories/types-of-accounts suggests:

"Asset Accounts ... can be used ... to keep a household inventory..."

I cannot parse this out: How do I buy an item (with a category) in one account and record it into another (Asset) account?

  1. 1 Posted by dwg on 14 Jan, 2022 12:49 AM

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    I'm a fellow user.

    You cannot.purchase an item and have it as both an expense and as an asset that would effectively be double counting.

  2. 2 Posted by alkaprose on 14 Jan, 2022 01:21 PM

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    That's why I am asking. This statement in the documentation: "Asset Accounts ... can be used ... to keep a household inventory..." by the developers of the software seems to indicate otherwise.

  3. 3 Posted by dwg on 14 Jan, 2022 09:22 PM

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    This is not done by creating three legged transactions which is what you seem to be assuming.

    You need to create break it down to two transactions or have separate transactions depending on the circumstances.

    For example if you bought car for Cash you would not use a category of car purchase rather you would transfer the funds from a bank account to an asset account for the car. So it would be a transfer transaction not an expense transaction.

    Other assets that are already owned you could use the initial account balance to set up the starting balance then have appreciation/depreciation categories to record changes of value if you wish.

  4. 4 Posted by alkaprose on 15 Jan, 2022 12:18 AM

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    Thank you for helping me work this out.

    On a more common purchase, buying a toaster has one category (Sales Tax) that could have Federal tax consequences, so I want to track that as well as the Appliance category.. Would I be able to using this method?

  5. 5 Posted by dwg on 15 Jan, 2022 01:26 AM

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    Moneydance is based on accounting principles and in non-investment accounts this fundamentally mean that each transaction must have a source and a target.

    So a deposit into an account must have as its source a category or an account, likewise a payment from an account must have another account or category as its target. Hence any transaction(s) that can fit these rules can be entered into the software.

    So it comes down to want you want to actually show and be reported on as to the transaction that would be needed

  6. 6 Posted by alkaprose on 15 Jan, 2022 02:09 PM

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    Again, thanks. I will be checking with the devs to see why they said this. I will post a reply here.

  7. Support Staff 7 Posted by Ethan on 15 Jan, 2022 05:03 PM

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    I think the intention is similar to what dwg described above: "Other assets that are already owned you could use the initial account balance to set up the starting balance then have appreciation/depreciation categories to record changes of value if you wish."

    Asset accounts are mostly meant to be a general 'catch all' account whose value could be increased or decreased as the specific situation warrants. That allows them to be used for multiple purposes. I think in general most people don't use them unless they're trying to do something that falls outside of the most normal purchases from bank accounts or credit cards, like tracking the value of large assets over time so it would show up in one's overall net worth (like a car, house, etc).

    It may be more useful to describe what you are trying to track and how, and we could then provide more concrete suggestions about how to go about that, which may or may not involve asset accounts.

    Ethan
    Infinite Kind Support

  8. 8 Posted by alkaprose on 15 Jan, 2022 05:23 PM

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    Since the knowledgebase article says:

    Asset Accounts are a “catchall” account. They can be used to track the value of a home, to keep a household inventory for insurance purposes, or track any other items you would like included in your net worth.

    It implies, to me, that the how is worked out in the devs minds.

    I am starting with the assumption that a household inventory is items you would enumerate on an insurance claim.: toaster, clothing, furniture, tablet, towels, tools, etc.

  9. 9 Posted by dwg on 15 Jan, 2022 09:08 PM

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    I do not believe it was ever the intention that Moneydance maintain a household inventory to this level of detail. It sounds like something that a simple spreadsheet could do.

  10. 10 Posted by dtd on 15 Jan, 2022 10:43 PM

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    just a user - if you want to do a high level of detail, I'd recommend the transactions be the detail that compile into each asset account.

    I've attached a concept in the picture. You create asset categories like Household Inventory, and if you want some detail, you could put Kitchen, Bedroom, etc as subassets. Then you can enumerate specific asset items (like toaster, clothing) as transactions, with memos, values, dates if you wish. Maintaining such would be your choice as MD doesn't really care what you put.

    The only caveat I'd throw in is to create an expense category called AAAsset Offset or something like that - as you must do the double entry bit, and Assets take the earliest alphabetical expense category as the default rather than letting you assign one. What this does is allow you to add or subtract transactions without a lot of work - the amounts drop into this offset bucket. (You can still use other categories, but this becomes the "I don't have to worry about it default")

    Hope that helps.

  11. 11 Posted by alkaprose on 17 Jan, 2022 07:04 PM

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    From what I understand, you are proposing replacing some of the

    Account-Functional Description structure (TV-Appliance) with

    Inventory-Location structure (Kitchen-TV, Den-TV, Bedroom-TV)?

  12. 12 Posted by dwg on 17 Jan, 2022 08:03 PM

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    dtd's approach is just using the description/memo fields to describe the assets, for a report you can just print the transaction, this saves messing with categories for each item and is more like what an inventory list would look like.

  13. 13 Posted by dtd on 17 Jan, 2022 09:43 PM

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    just a user -

    As dwg said, the idea here is to create what you are asking for - keeping a household inventory for insurance purposes. And that does involve an inventory and a valuation.

    If you don't want a location structure (which I made simply because that's how my mind works - I think about what is in each room), you could instead use a functional description structure - it's just a matter of choice.

    So going with functional description, the structure could be:

    Household Inventory
         TVs/Appliances
         Furniture
         Computers/Electronics
         Clothing

    Such a structure might work better for you, based on how you perceive your household inventory (or anything else for that matter - Cars, Home value, etc.)

  14. 14 Posted by alkaprose on 19 Jan, 2022 06:29 PM

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    I have tried to make this work. Unfortunately, I use a nested category structure for certain categories (which allows me to group like expenditures together), which resulted in duplicate categories:

    Health
      Dental
      Equipment
      Health Insurance

    Changing to:

    Health
      Dental
      Health Insurance

    Inventory
      Health
        Equipment

    I do appreciate your wrestling with this problem. I hope I do not sound like I am whining.

  15. 15 Posted by alkaprose on 22 Jan, 2022 10:28 PM

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    It appears this discussion has reached an end.
    Thank you to dwg and dtd for their suggestions, they kept me from wasting time.
    I was hoping there was something support had figured out that I had missed, but no clarification has been forthcoming. I understand, they have limited time and this is a bookkeeping, not inventory, program.

    I would suggest revising the knowledgebase article to save this question coming up again.

    I will be trying the method suggested by the users above: tag the transactions and run a report to aggregate the information, export to CSV. It worked in Quicken and KMyMoney when I used them. QuickBooks has been a little more problematic.

  16. Support Staff 16 Posted by Sean Reilly on 23 Jan, 2022 01:44 PM

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    Hello,

    I agree with dtd's approach described above, in which you create one or more asset accounts to contain your inventory, with one category to offset the assets. I would suggest using tags for the categorisation for each item in the inventory, because that way you could have one asset account for home inventory and wouldn't need to move transactions to a different asset sub-category if it changed rooms (or any other categorisation). Your categories look great, but I would record the purchase of each item separately from the asset record. That was the purchase is regarded as an expense (including taxes, etc) in the best expense category, and the asset itself can be valued something different than what you paid for it.

    I'm sorry for our lack of response here, but I think dtd and dwg did a great job covering the ideas. We've recorded a ticket in our bug/feature-tracking system to add a Default Category setting to asset accounts.

    Thanks,
    Sean

    --
    Sean Reilly
    Developer, The Infinite Kind
    https://infinitekind.com

  17. 17 Posted by alkaprose on 23 Jan, 2022 07:32 PM

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    Thank you for the reply. I think I've got it now. To repeat my first post for completeness:

    https://infinitekind.tenderapp.com/kb/accounts-and-categories/types... >suggests:

    "Asset Accounts ... can be used ... to keep a household inventory..."

    I cannot parse this out: How do I buy an item (with a category) in one account and record it into another (Asset) account?

    My answer is, first:

    • Create an Asset account named "Inventory"
    • Create an income Category named "Offset Inventory"

    Then, when you have a transaction you want to follow:

    • In an account's transaction list, create your transaction..
    • Duplicate this transaction.
    • Batch Change this duplicate transaction's Account to the Inventory account.
    • In the Inventory account, change the transaction split category(ies) to Offset Inventory AND
    • Move the amounts paid from the "Decrease..." to "Increase..." column.

    This retains everything in Moneydance: the category in the original transaction and the monetary value of the transaction in an asset account.

    HOWEVER, the monetary value is recorded twice, in the original and the Offset Inventory categories. To work around this, "Inventory Offset" can be filtered out in each report as needed (at least the ones I checked). I haven't found, on a quick glance, any dashboard extensions affected.

    Have I missed anything?

  18. 18 Posted by dtd on 26 Jan, 2022 02:22 AM

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    I don’t think you’ve missed anything for yourself. I’d like to see what you/I/dwg wrote as a knowledgeable article, but it could be more comprehensive (more detail, more options, etc.)

    I think, for you, you’re where you need to be on this topic.

  19. 19 Posted by alkaprose on 27 Jan, 2022 09:18 PM

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    Thanks for staying on top of this puzzle.

    So, the answer is split based on what you want. "Inventory" as::

    1. An account: do a multistep kludge for each inventory item. Autohotkey, here I come!

    2. A category: Tag each item in the original transaction.

    Can do exports in each. Saving as an asset keeps the capital in Moneydance and allows reports.

    I am puzzled there is no explanation by the devs to support their Knowledgebase statement. To me, it implied they had a solution in mind. I must have misread.

    Quicken attempted an inventory add-on in the past and abandoned supporting it. I think I see why.

  20. 20 Posted by dwg on 27 Jan, 2022 09:39 PM

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    Moneydance is a flexible Personal Finance Package, Given its flexibility you can pretty well record the value of anything in the software, provided you follow accounting principles. The flexibility also mean that you can record to different levels of detail.

    Given that a home inventory is a list of items and their value it is not difficult to envision that you can record these, but it then comes down to what level of detail do you want, how do you want to be able to report them etc. Thus it becomes how to record the information to get the level of detail and report types I want. There is no one answer to this.

    Moneydance is not prescriptive software, sure you need to follow accounting principles, which is really double-entry accounting, but that is about it, there are some best practices but these are not enforced so if you need/want to you do not have to follow these.

    Other programs tend to be more prescriptive and at times you can view that as more restrictive. Quicken typically uses wizards for data entry, their claim is for ease of use, but they do force how data is entered and held so there is a lack of flexibility. Quicken also does not follow account principles so they need to take this approach to get the data recorded in an useful way.

  21. 21 Posted by dtd on 27 Jan, 2022 09:59 PM

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    You have it right, but you do seem to have a disconnect in perception about the software.

    You say the "developers don't have in mind what they mean by - 'Asset accounts can be used to keep a household inventory.'" - This entire thread describes what that statement means and how asset accounts can be used in that way. The lead developer (Sean) agreed that what we were describing is what that statement meant.

    As dwg said, the software is flexible and can be used in many ways that a user may want to use it. You call one of your own methodologies as a "multi-step kludge" when actually it is how you perceive it. You describe recording a purchase, then duplicating it in your asset inventory. Yes, that's a bit ponderous, but only because you are placing two different concepts in synchronicity.

    You said yourself that this is "inventory for insurance purposes". That is not necessarily associated with the purchase itself - it is two different processes. My impression is that you'd probably do a lot of the inventory as historical - it's not like you are going to record purchases from years ago and then add it as inventory. At least I don't think so.

    Sean also noted that if you do go to historical purchases (or even current purchases), you don't have to duplicate the item - you may wish to record a different value from purchase to inventory. And what if the item was a gift? The value would only go into inventory - I'd think you wouldn't put a purchase of zero for each gift.

    All I'm trying to say is that recording purchases and recording inventory are two different processes, where occasionally, you might do the two concurrently (your multi-kludge statement), but in many (most?) cases this would be a separate process.

    But, again - yes, you have the concepts correct, with maybe combining the concept of purchase and inventory too closely together.

  22. 22 Posted by alkaprose on 28 Jan, 2022 07:29 PM

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    Thank you again for the effort put into clarifying this problem. A lot of skullsweat has been involved and I thank dtd and dwg for their help in teasing out what I was seeking. It has helped me to discover an unrealized opinion:

    Inventory is an asset and therefore capital. Moneydance follows other complicated forms of capital: investments, mortgages, loans. It can be done crudely, as we have worked out. Why not internalize the money flow into an inventory asset Account in Moneydance?

    Because that is not a financial software program's job. All of the above are flows of money. Household inventory is static, a dead end where there is no predictable flow out. A different problem to be solved, and as dtd noted, historical. .

    The Knowledgebase mentioning it could be used to follow inventory was not to imply inventory tracking could be done in Moneydance, but that the purchase information could be extracted if needed.

    Maybe, now, I can say my questions are answered. But I am keeping an open mind.

  23. System closed this discussion on 29 Apr, 2022 07:30 PM.

  24. alkaprose re-opened this discussion on 26 May, 2023 02:08 AM

  25. 23 Posted by alkaprose on 26 May, 2023 02:08 AM

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    The way I outlined above has too many steps that allow error. I have abandoned the idea of following purchases as assets in Moneydance, especially since I sell items I no longer need and found returning an item created a whole new problem. I now follow my purchases by exporting an MD report to Excel.

  26. 24 Posted by dwg on 26 May, 2023 02:55 AM

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    I do not see that it should always be assumed that every piece of remotely finance or value data should be kept in Moneydance or in any one program, Keep where it makes the most sense.

    For myself I keep some investment related data in spreadsheet files, simply because Moneydance does not handle it properly easily and it is just easier and more efficient to do it that way.

    What I have done to concentrate the information is that I created a Spreadsheet folder within my Moneydance data set,so that all the data is in one place and gets backed up together. I however use two programs to manage different aspects of the data - Moneydance and LibreOffice.

    So use the tool that makes the most sense.

  27. 25 Posted by dtd on 26 May, 2023 03:31 AM

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    just a user -

    Sounds like you have followed the process, maintain a high level of detail, and find it too cumbersome. Makes sense.

    Me? I do have a Household inventory, but it is on a fairly high level - not saying this is me - but unless something has a $500-$1000 value or above, I ignore it (at least for inventory, I of course register the transaction). A car, a new bed, definitely a new computer, those I record, the others I just make a transaction and move on. I might occasionally put a $2000 for new stuff inventory bit, but that's where I have already mentioned the separation from the transaction versus the inventory concept.

  28. 26 Posted by dtd on 26 May, 2023 03:35 AM

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    OTOH - @Sean - would still love to see a default category for Assets and such.

  29. System closed this discussion on 25 Aug, 2023 03:40 AM.

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