Transfers Between Checking and Savings

[Ian Konen]

On Fri, Mar 15, 2013 at 12:49 PM, John Ralls <jralls at ceridwen.us> wrote:

>
> On Mar 15, 2013, at 7:24 AM, 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?
> >
>
> From an accountant's (and therefore Gnucash's) viewpoint, this is wrong. A
> transfer between asset accounts has no effect on equity and so is neither
> income nor expense.
>
> If you want a report showing the flows between the two, use a Transaction
> Report. In the Options dialog on the account tab select the savings account
> and in the filters tab select the checking account. Adjust the rest to your
> needs.
>
> Regards,
> John Ralls
>
>
I would second John's answer with prejudice!  It's not just wrong from the
perspective of "proper accounting".  Treating a transfer of funds between
accounts that both belong to your parents as "income" when it's just not
seems like it could only add confusion to you and your siblings'
understanding of your parents' financial situation.  I would guess that for
whatever question your siblings have there is a report that will show the
answer by default without messing around with account classes.  If their
concern really is the observation that you pay bills from checking but it's
the savings account dropping over time, then the transaction report (as
John suggested) will do the job.  If the concern here is figuring out how
long their savings will last at their current spending levels, then there's
almost certainly a better report to use...like the assets bar chart (which
shows assets as a function of time).  The profit and loss is useful to
answer the question "what are they spending all their money on?" and "how
can they cut back to make it last longer?".

*BTW Interest earned should be treated as a real income account.  If you're
doing something like just transferring the earned interest on the savings
account over to checking so the savings account holds at a steady level,
then it is the transfer from income:interest to an asset account that shows
up (correctly) on an income / expense report.

-- 
Ian Konen
iankonen at gmail.com
www.linkedin.com/in/iankonen
978-821-6498