Same category for Income and Expense

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grachte
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Same category for Income and Expense

Post by grachte »

In the user manual I found the following note: "Don't use the same category for Income and Expense, as this will cause incorrect balance calculations.".
Can you elaborate on this, because I have the intention to use some mixed in/out categories, but I'm afraid to mess up my database.

Thanks,
Eric
Nikolay
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Re: Same category for Income and Expense

Post by Nikolay »

This is just a recommendation, nothing more. You can use the categories at your discretion.
MartinArmstrong
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Re: Same category for Income and Expense

Post by MartinArmstrong »

Nikolay wrote: Sat Dec 04, 2021 7:59 pm This is just a recommendation, nothing more.
I've always been puzzled by the purpose of the Notes about categories in the manual.

Similar notes appear in two sections:

Category notes.png
Category notes.png (60.11 KiB) Viewed 870 times

As worded in section 9.2, it doesn't appear to be just a recommendation.

Does it cause incorrect balance calculations? If not, then what is the real reason for these notes?
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Renato
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Re: Same category for Income and Expense

Post by Renato »

I can't understand the point of this advice either.
Use this for years so and could not find any problems.
,
Example: Doctor's bill <> health insurance credit = effective health costs.
Of course, the time history can only tell you a little, since the credit notes arrive after the fact.
regards Renato use MMEX since 2009, now with Windows 11
mikhailo2608ilaol
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Re: Same category for Income and Expense

Post by mikhailo2608ilaol »

Health care expenditures are a special case in which the recommendations make sense.

In the scenario cited where Doctor's Bills (expenses/withdrawals) less reimbursed health care credits (incomes/deposits) equals effective medical costs if you put them both into the same category the actual cost of medical care is obscured by the total - effective medical cost - rather than the components Doctor's Bills and Reimbursed Health Care credits. For most people Doctor's Bills equate to effective health care costs. Only those who are fortunate enough to have a portion of their doctor's bills reimbursed by their employers health insurance does the effective health care cost become lower than the the cost of the Doctor's bills. To accurately track your health care costs you need to keep the charges and the reimbursements separate. This is because you may not get those reimbursements in the future if you change employers or the new collective bargaining unit agreement with your company eliminates or reduces the reimbursement or you retire.

If you are only concerned with your total out of pocket health care costs then you should be comfortable with having a single category for both your Doctor's bills and the reimbursements. But you may find it advantageous to aggregate the expenses and the reimbursements separately - I do - then this requires a separate category for each. The downside of separate categories in an instance like this is that in order to find the effective health care costs (your out of pocket health care costs) you have to manually subtract the credits (reimbursements) from the expenses (Doctor's bills). The upside of separate categories in an instance like this is that you can accurately compare health care costs over time and not be concerned over with whether your employment status over a particular period had an effect on the actual health care costs as opposed to the out of pocket health care costs.
Last edited by mikhailo2608ilaol on Sun Dec 05, 2021 11:38 pm, edited 1 time in total.
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Renato
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Re: Same category for Income and Expense

Post by Renato »

That's absolutely right, the question is the level of detail you want.
Personally, I am interested in how much I spent.
The annual statement from the health insurance company shows me all the costs.
regards Renato use MMEX since 2009, now with Windows 11
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Re: Same category for Income and Expense

Post by Rodrigo »

grachte wrote: Sat Dec 04, 2021 3:43 pm In the user manual I found the following note: "Don't use the same category for Income and Expense, as this will cause incorrect balance calculations.".
Can you elaborate on this, because I have the intention to use some mixed in/out categories, but I'm afraid to mess up my database.

Thanks,
Eric
I've tried to use the same category that I use for Expense as an Reimbursement/Income, my expectation was that the values on the reports would compensate the Expense/Income and show the value that I actually got out of my pocket.

Here my findings so far:
  1. The Home Page shows the values as I expected.
  2. The "Where the Money Goes" report also shows the values as I expected.
  3. The "Income vs Expenses/Monthly" doesn't discount the Reimbursement on the Expense column, but it sums the Reimbursement on the Income column, so the Balance is ok.
You can check this behavior on the attached database.
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Last edited by Rodrigo on Fri Dec 24, 2021 1:00 pm, edited 1 time in total.
whall3y
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Re: Same category for Income and Expense

Post by whall3y »

The "Income vs Expenses/Monthly" doesn't discount the Reimbursement on the Expense column, but it sums the Reimbursement on the Income column, so the Balance is ok.
Yes, this takes all WITHDRAWALS as Expense, and all DEPOSITS as Income. Which results in the correct balance as you note. MMEX does not view a 'Category' as either and Expense or Income so cannot account these any other way.
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