contra accounts

enruck's Avatar

enruck

04 Dec, 2009 06:40 PM

i need to open an account in moneydance for home improvements. the money will come from savings. the supplies will be purchased on my credit card though, and i pay my credit card from my checking account. cant i just transfer the amount i want to budget from my savings into checking and then just attach a contra account called "Home Improvement" to checking. when i record a transaction in my credit card the category can be the home improvement account and then when i pay the credit card balance from checking the amount for home improvement will still be discernable from my checking. right? any suggestions? also what is "default category"? i see that when i try to set up a new bank account. does my answer lay in this somewhere?

  1. 1 Posted by avp2 on 12 Dec, 2009 04:00 AM

    avp2's Avatar

    The answer is yes. Although, the category you use for home improvements would be an income type if it were to be considered "contra". I would just make it an expense and its balance would increase as purchases were made, via checking or credit card or cash (if you have a cash account).

    Depending on what tracking you are looking for, you could also make a bank type "child" account of your checking called "home improvement funds" to keep its amount separate and pay your credit card (at least partially) from it or even use the MD "budget" function.

    Keep in mind however "category" accounts zero out when you "close" your books (if you do); in MD you archive to close. For this reason, I personally use an asset type account to track home improvements which I want to increase my home's cost basis; assets do not zero at close. I put improvements that are not considered cost basis increasers in a "maintenance and repairs" category. I find this works well with the MD budget function too.

    Default category is simply what is auto-entered in a transaction for which there has not been a previous one to use as a template. As you enter a new transaction, MD will auto-enter the transaction fields of a previous transaction where the description matches. The default is handy for accounts that have many transactions of the same category, like "interest income" for a CD.

    Hope this helps.

  2. Angie Rauscher closed this discussion on 30 Apr, 2010 06:13 PM.

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