Transfers Between Checking and Savings

[Mark Phillips]

To translate your recommendation to my situation.....

When I transfer $x money from savings to chekcing I do the following...

Deposit $x into the checking account (current asset)
Withdraw $x from the savings account (current asset)

Withdraw $x from Opening Balances
Deposit $x into the Income account Transfers from Savings

Is this the best way to handle this situation? Does this violate any
accounting principles?

Mark

On Fri, Mar 15, 2013 at 9:35 AM, Michael Hendry <hendry.michael at gmail.com>wrote:

>
> On 15 Mar 2013, at 14:24, Mark Phillips <mark at phillipsmarketing.biz>
> wrote:
>
> > I make periodic transfers from savings to checking. However, I just make
> > the transfers as deposit in checking and withdrawal from savings. When I
> > run an income/expense report, those transfers do not show up, obviously.
> > So, I created an income account called Transfers from Savings, and
> whenever
> > I transfer money I deposit in the checking account and credit the income
> > account. But what is the corresponding transaction in the savings
> > account? Or, is there a better way to do this?
> >
> > The reason I want to do this is that I am managing my elderly parents
> > accounts, and the other siblings want to see detailed financial reports.
> > Since my parents are living off their savings and a few other income
> > sources, I want to show the transfers from savings as income for them. Is
> > there a better way to do this?
> >
> > Also, once I figure out how to show the transfers as income, (unless
> there
> > is an accounting reason not to do this!), how do I change the reconciled
> > transactions that go straight from savings to checking without the
> > intermediate income accounts?
> >
> > Thanks,
> >
> > Mark
>
> As an elderly parent myself, I have a similar problem to solve.
>
> Some years ago, my wife and I invested some of our savings in a Loan
> Trust, with our children as beneficiaries.
>
> We take a regular monthly sum from this trust fund, calculated to return
> our "loan" over a twenty year period, without interest. Any interest
> generated by the fund is reinvested, and in practice it is keeping the
> value of the fund level. Assuming we survive the twenty years, we'll have
> recovered the loan we made to the trust, and the money remaining in the
> trust will be outside our estates for Inheritance Tax purposes.
>
> I have treated this fund as a Current Asset, receiving its opening balance
> from the Opening Balances Account.
>
> When the monthly payment of £x comes into my current account, I deal with
> it as a split transaction, taking £x from the Loan Trust account (Current
> Asset) into my current bank account, but at the same time taking £x from
> Opening Balances and transferring it into an Income Account which I've
> called "Pseudo Income".
>
> As we're treating this regular transfer of cash into our current bank
> account as part of our monthly income, this makes sense for budgeting, but
> I suspect it doesn't follow standard book-keeping practice!
>
> You obviously want to distinguish between income (which is subject to
> income tax) and expenditure from savings (which isn't), which is why I've
> called it "Pseudo Income".
>
> Michael
>
>