Unexpected Behavior / MoneyDance

LRD's Avatar

LRD

02 Dec, 2012 09:00 PM

Environment:

Moneydance 2011r2 (803)
OS X 10.6.8

I am seeing something that is really confusing.

I have an ASSET account -- a deposit (pre-paid) for a company that bills me monthly. Initial balance in this account was $280.00

I have a LIABILITY account, for Accounts Payable. Previous balance was 0.00

I received a bill from the company in question, in the amount of $87.61. I posted this amount ($87.61) to an expense account, showing an increase of $87.61 to the Accounts Payable LIABILITY account.

New status: ASSET account for the pre-paid deposit shows $280, this is correct. LIABILITY account for Accounts Payable shows $87.61, also correct.

The company that provides the service deducts the current bill ($87.61) from my pre-paid deposit ($280.00), leaving a balance on my pre-paid deposit of $192.39

Now, I create another transaction. I go to the LIABILITY (Accounts Payable) register and decrease the amount owed by $87.61, with the "Category" entry of the ASSET account (the Pre-paid Deposit).

New status: LIABILITY account (accounts payable) now shows zero. This is correct.

However, MoneyDance automatically updates the ASSET account (Pre-paid Deposit) incorrectly. The $87.61 should have been DEDUCTED from this account -- instead, that amount is added!

So, the ASSET account that started at $280, and should have had a deduction of $87.61 leaving a balance of $192.39, instead has had $87.61 ADDED (instead of deducted) to the original balance of $280, now showing a new balance of $367.81

Is this the "new math?" What's happening, is if I spend money from this ASSET account, the amount that I spend is added to the account, instead of being deducted.

If real life worked like this, I could get rich, just by spending money.

There is something strange going on here; can you help me with this?

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  1. 1 Posted by Jon Hoover on 03 Dec, 2012 06:50 PM

    Jon Hoover's Avatar

    Hi,
    Well you gave me a head scratcher for a moment and got me to think hard about part of the program that I don't have to deal with so much, so thanks for the challenge. So here is what is going on I think.
    I think the use of Increase and Decrease is somewhat misleading for this account type. One would assume that when you use the increase column you are increasing your liability when you are in fact decreasing it. You are decreasing it because the correct way to enter a liability is to enter it as a negative (or decrease).
    The design of the program expects most users to do transactions between a bank type account and a liability account. If you make a deposit of $100 in your bank account from your liability account then you acquire a -$100 liability.
    You are creating a liability to expense account transaction in your liability account, which as far as I know is acceptable accounting practice and I apologize that the program's display makes doing so a little confusing.
    You need to put that expense transaction as a decrease to your liability account. If you do that then subsequent account behavoir and transactions should make more sense.
    If you'd like, I'd like to switch this conversation to public. Many of our users have lots of accounting experience and I am curious to hear if they are okay with how the increase and decrease currently works.
    Thanks and let me know what you think of my take as to whats going on.
    Sincerely,
    Jon Hoover, Moneydance Support

  2. 2 Posted by LRD on 03 Dec, 2012 07:03 PM

    LRD's Avatar

    Thanks for the response. No problem switching the discussion to
    public, just keep my real name "private."

    It might be more intuitive if you swapped column headings ("Increase,"
    "Decrease") on the Liability type accounts.

    Or, better yet, for all accounts, add one more word to the column
    headings: "Debit" or "Credit," as appropriate. That would clarify
    things, and it would certainly no be objectionable to any CPA. And it
    would really clarify (for those of us who have passed "Accounting
    101") the correct usage.

  3. System closed this discussion on 31 Mar, 2015 03:55 PM.

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