Question about split transactions
in [Quicken]
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From: Andrew on 19 Nov 2009 17:20 Wait a second guys ! Aren't you all over analyzing the original post? The OP bought a bunch of stuff in two categories (Games and Software), wants to spread the cost of the sales tax across what he bought to find his out of pocket cost for the stuff for his out of pocket expense. I am assuming we're talking about personal expenses, nothing he's reporting as a business expense. THAT'S IT! Nothing more. If I go into a store and buy something for $5.00 and they charge me 8% sales tax, the cost to me for the item was $5.40. If I buy two different things of varying cost, then the sales tax needs to be distributed across proportionally to allow me to track my true out of pocket costs for the items. I think that's all he cared about! How much did each of the games and software cost him? That's all. Not hard. -- ------------------------------------------------------------- Regards - - Andrew
From: slb on 19 Nov 2009 22:51 R.C. You hit it on the head. Quicken was written as a personal check writer, not a GAAP compliant double-entry business accounting package. Unless you're running a publicly traded company or have other business requirements, GAAP, depreciation schedules, salvage value, etal. will probably have little meaning for you. I have an MBA in finance and 12 years in the "Big 8" (am I dating myself RC?) and have seen every chart of accounts scheme imaginable. I personally record sales taxes as a separate category for a couple of reasons. Years ago they were deductible Schedule A items along with state and personal property taxes. It always reduced the tax bill by a coupleof hundred and I had detailed backup if I was ever audited. I'm also curious how much I pay all the various government entities for the year. Sales taxes amount to a couple of thousand, on top of all the other taxes I pay the vultures. For some reason though, I never broke out all the taxes on utility bills -- talk about extortion. Finally, it was easier for me to put taxes in a separate category than to try to apportion and deal with the taxable/non-taxable issues and different tax rates by municipality. Years ago if I made a purchase in one municipality and returned to the same merchant in another, I could be charged/credited at different tax rates. Also Quicken's crappy little calculator didn't help simplify the effort. Am I GAAP compliant? Who cares? It's money out of pocket and Quicken lets me categorize it and report it any way I see fit. There is no right or wrong answer when it comes to PERSONAL finance. sb "R. C. White" wrote: > Hi, Tom. > > "TomYoung" <sombodee(a)gmail.com> wrote in message > news:b368275e-7201-4378-865a-906ae853b15a(a)f1g2000prf.googlegroups.com... > > On Nov 18, 12:20 pm, Doug <Doug_Ell...(a)yho.com> wrote: > >> I'm actually having a hard time thinking of a situation in which one > >> would capitalize a point-of-sale Sales Tax payment. Maybe there is one. > > > > Well, from a strict theory standpoint, R.C. White expressed the > > accounting convention correctly, so there's actually lots of > > situations where you'd capitalize sales taxes. Quicken gives you the > > flexibility to be conventional or unconventional in your > > accounting. :-) > > I agree. > > Sometimes it's hard to recall that Quicken was designed as a checkbook > program. It took a very pragmatic approach, ignoring accounting theory in > many ways. > > >> Many of my purchases involve a mix of taxable and non-taxable items. So > >> when for example I'm splitting a Costco bill, I might have some portion > >> categorized as groceries, some as clothing, and some as medicine. In my > >> state, groceries aren't subject to sales tax, so if Quicken apportioned > >> the sales taxes to all the split categories, that would be incorrect > >> also. > > > You've expressed the most significant problem to the "really easy to > > implement" process of automatic allocation of sales tax. In > > California, unprepared food items sold at supermarkets are not taxed > > but ready-to-eat hot foods are taxed, as are soft drinks and cat > > food. But, for my accounting, it's all "food" and the only way an > > automatic allocation of sales tax could work is if I set up two > > categories of "food" - maybe "food non-taxed" and "food taxed" and > > then Quicken supplied a check box in the category setup that > > identified each category as to sales tax eligibility. Depending on > > how you categorize purchases, where you shop, and your local sales tax > > structure you could end up with dozens of categories you'd have to > > identify this way. > > I practiced public accounting in California for 18 years (1962-1980) and had > plenty of experience with the sales tax, both professionally and personally. > Then I lived and practiced in Oklahoma for 10 years; the sales tax rules > were mostly the same. Now I've been in Texas for nearly 20 years, but > retired, so my experience here is only personal, not professional - but the > general sales tax rules are still similar. "Groceries" are not taxable, but > meals and some prepared foods are. As you said, a Quicken programmer would > have to deal with "dozens of categories" in trying to program automatic > allocation of sales taxes - and then we users would have to classify each > multi-item purchase receipt to match those! Can you imagine how much WE > would gripe about that inconvenience? > > >> But I still come back to the notion that Quicken can't be expected to > >> read my mind. It has to be programmed with some conventions in mind, > >> and the conventions Intuit used are vaguely based upon bookkeeping > >> principles. My recollection is that this thread began with a new > >> Quicken user asking why Q didn't let him do something that Microsoft > >> Money did let him do. The only reasonable answer is that Intuit didn't > >> write the software that way because they didn't think anyone > >> would/should want to falsely categorize an expense. > > > > Nah, that's not the case. Accounting conventions are certainly *not* > > what drives the programming at Quicken; it's much more the "black > > letter" government rules and and regulations, e.g., capitalizing the > > "expense" of broker's fees in your stock basis. I've complained here > > before, many times, that Quicken should have a lot more accountants > > working on the product to catch improper accounting that's "built in" > > by the programmers. > > Tax laws are written by legislators - and very few of those are accountants. > That's why so many corporations have to keep more than one set of books. > One set is kept according to accounting principles developed over centuries > by accountants who were trying to report accurately the results of business > activities. The other set is kept according to laws, which are concerned > with producing tax revenues and - more and more in recent decades - with > motivating taxpayers to act in certain ways that lawmakers want us to > behave. These tax provisions very often do not conform with accounting > principles! They don't have to make sense; they are the LAW! :^{ > > Even if tax laws allow you to deduct the sales tax you pay on your new car > or computer or shirt or candy bar, the tax on that transaction is still a > part of the cost - to you - of buying that property. > > Accounting theory has evolved over the centuries, but I suspect that, even > at the "University of Connecticut, many years ago", that is what was being > taught in accounting theory classes. That's what I was taught at the > University of Oklahoma in the 1950's (BBA in Accounting, 1956). And I'm > pretty sure that is what today's students are learning. > > > Tom Young > > RC > -- > R. C. White, CPA > San Marcos, TX > (Retired. No longer licensed to practice public accounting.) > rc(a)grandecom.net > Microsoft Windows MVP > (Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64)
From: Jose68 on 20 Nov 2009 01:09 On Nov 19, 2:20 pm, "Andrew" <and...(a)jkl.com> wrote: > Wait a second guys ! Aren't you all over analyzing the original post? The > OP bought a bunch of stuff in two categories (Games and Software), > wants to spread the cost of the sales tax across what he bought to find his > out of pocket cost for the stuff for his out of pocket expense. I am > assuming we're talking about personal expenses, nothing he's reporting as a > business expense. THAT'S IT! Nothing more. > > If I go into a store and buy something for $5.00 and they charge me 8% sales > tax, the cost to me for the item was $5.40. If I buy two different things of > varying cost, then the sales tax needs to be distributed across > proportionally to allow me to track my true out of pocket costs for the > items. > I think that's all he cared about! How much did each of the games and > software cost him? That's all. Not hard. > > -- > ------------------------------------------------------------- > Regards - > > - Andrew Thanks, Andrew! Right on!!! I don't know how this ended up as a discussion about capitalizing stuff!!! A $25 game and a $35 program? Maybe someone doesn't use the split function at all... but if you do extensively, as I do, what I was asking for saves me time. In some cases, I even want to keep record of the price I paid for different items (some of them in the same category) bought at the same time. Which is why "splits" were created! I might have 7 line items in the split window, or more! Actually, Q allows to have tens of lines!! And to add even more! Well, how do you do it today? Do you multiple every item (let's simplify and assume that everything includes tax in this given receipt) times the sales tax %? If you have 7 line items, how many extra key strokes are we talking about? Let me tell you, the functionality of Money is really simple, and again, Doug, doesn't force you to use it!!! For me, it is much easier to add the price of the items from the receipt (which are pre-tax), and once I've split all the categories, allocate the remaining amount (after checking that all that is left is really the tax amount) proportionally among all the split items. It works great. And I'm sure more people would use this that some features that Q has implemented. And related to the fact that some expenses are not taxable, I agree. I never used the "F6" key in Money to split my Costco bill into groceries and clothes. I calculated the easier one, applied manually the taxes to it, if applicable, and left the rest for the other category. I can do that in Q the same way as in Money But please, don't get this into an accounting discussion. It is much simpler. I know that a lot of people adds sales tax to the same category of the item being purchased. If splits are a feature of the program, it just makes sense to give options for users to do things in a simpler way.
From: Jose68 on 20 Nov 2009 01:26 On Nov 19, 10:38 am, Doug <Doug_Ell...(a)yho.com> wrote: > > Even if tax laws allow you to deduct the sales tax you pay on your new > > car or computer or shirt or candy bar, the tax on that transaction is > > still a part of the cost - to you - of buying that property. > > > Accounting theory has evolved over the centuries, but I suspect that, > > even at the "University of Connecticut, many years ago", that is what > > was being taught in accounting theory classes. That's what I was taught > > at the University of Oklahoma in the 1950's (BBA in Accounting, 1956). > > And I'm pretty sure that is what today's students are learning. > > > RC > > Well, of course it is "part of the cost". Aren't some costs expensed? > Aren't some costs booked in one account, while others to other accounts? > > Remember where this started: someone new to Quicken who wanted to > categorize his expenses. I'm not disputing that sales tax is a cost. > I am a little slow on the uptake here with the notion that sales taxes > paid are an asset <grin>. > > Doug Doug, I remember where this started. I did it. And let me tell you, I never said anything about assets!! My question was how to categorize them, as an expense, NOT an asset, if someone wants to do it in the same category as the item being purchased. I understand you are suggesting that I categorize sales tax. Fine. You go ahead and do it. I won't. For a few reasons: 1. I've lived in Spain, Singapore and California. In Spain and Singapore, sales tax were never deductible. So there was no point in using that category. 2. I don't see the value in knowing how much I spent in sales tax. But I want to know how much I spent in things, including EVERYTHING that I had to pay in exchange of the given good 3. A lot of my expenses are in just one category. As I download the expense from my bank or credit card, I can assign the TOTAL amount to a category. Having to split every single entry in Q would be a pain so big that... I wouldn't do it :) So, for those of you that do not care about sales tax as a category, and include the tax in the original category, how do you enter this transaction from Walmart? - $35 in clothes for my kids - $25 in clothes for my wife - $30 in a cool accessory for my car - $45 in a lamp to replace the one I broke last week - $20 in replacement parts for my bike - $13.56 in sales tax (8.75% in San Diego) - $168.56 total Do you type this? - $35 * 1.0875 - $25 * 1.0875 ..... and so on??? What I'm saying is: you type (or is downloaded) a total of $168.56. Then you type $35, $25, and so on, going thru your receipt. And when you are done, there is an unassigned value of $13.56. At this time, you press "F6", and all amounts are basically multiplied by 1.0875 (instead of you typing *1.0875 5 times, in this example). Am I so crazy asking Q developers to look into this? Is this as insane as Doug suggests?
From: R. C. White on 20 Nov 2009 09:14
Hi, sb. > I have an MBA in finance and 12 years in the "Big 8" (am I dating myself > RC?) Yep. I spent only 2 years in the Big 8. Twenty years after my BBA, I enrolled at Cal State College San Bernardino for an MA in Administration with a concentration in Business Administration, not Public Administration. (Don't you love alliteration?) Just about the time I graduated, they changed Cal State College to Cal State University, and they changed my degree to an MBA. Tax rules change every time Congress meets - and when Treasury adopts new Regulations or the IRS publishes new Rulings, Procedures, etc. - and often when some court somewhere decides that some rule or law has been interpreted wrongly. In the early 1960's, ALL state and local taxes were deductible on Schedule A, and we spent lots of time asking taxpayers about their cigarette taxes, gasoline taxes, auto licenses, etc. Then the rules changed: NO state taxes were deductible - except state income taxes - and then sales taxes. We tried for a while to record and/or reasonably estimate how much sales tax each client had paid; after the IRS published charts, we found that they usually were more generous than our calculations, so we stopped trying to do that for most clients. Remember, this was LONG before Quicken! Not one taxpayer in 100 had records to match what many of us have today. They couldn't even guesstimate how much they had spent for groceries or clothing or utilities or anything else (except their new car), with or without sales tax. So this kind of argument never happened in those days. The point of that last paragraph: If you plan to keep your personal bookkeeping on the tax basis, you'd better be ready to revise your system often. And don't try to reason it out; just follow the bouncing ball. > Am I GAAP compliant? Who cares? It's money out of pocket and Quicken lets > me > categorize it and report it any way I see fit. There is no right or wrong > answer > when it comes to PERSONAL finance. AMEN! RC -- R. C. White, CPA San Marcos, TX (Retired. No longer licensed to practice public accounting.) rc(a)grandecom.net Microsoft Windows MVP (Using Quicken Deluxe 2010 and Windows Live Mail in Win7 x64) "slb" <slb(a)nospamaol.com> wrote in message news:4B061229.8AA350D1(a)nospamaol.com... > R.C. > > You hit it on the head. Quicken was written as a personal check writer, > not a > GAAP compliant double-entry business accounting package. Unless you're > running a > publicly traded company or have other business requirements, GAAP, > depreciation > schedules, salvage value, etal. will probably have little meaning for you. > > I have an MBA in finance and 12 years in the "Big 8" (am I dating myself > RC?) > and have seen every chart of accounts scheme imaginable. I personally > record > sales taxes as a separate category for a couple of reasons. > > Years ago they were deductible Schedule A items along with state and > personal > property taxes. It always reduced the tax bill by a coupleof hundred and I > had > detailed backup if I was ever audited. > > I'm also curious how much I pay all the various government entities for > the > year. Sales taxes amount to a couple of thousand, on top of all the other > taxes > I pay the vultures. For some reason though, I never broke out all the > taxes on > utility bills -- talk about extortion. > > Finally, it was easier for me to put taxes in a separate category than to > try to > apportion and deal with the taxable/non-taxable issues and different tax > rates > by municipality. Years ago if I made a purchase in one municipality and > returned > to the same merchant in another, I could be charged/credited at different > tax > rates. Also Quicken's crappy little calculator didn't help simplify the > effort. > > Am I GAAP compliant? Who cares? It's money out of pocket and Quicken lets > me > categorize it and report it any way I see fit. There is no right or wrong > answer > when it comes to PERSONAL finance. > > sb > > > "R. C. White" wrote: > >> Hi, Tom. >> >> "TomYoung" <sombodee(a)gmail.com> wrote in message >> news:b368275e-7201-4378-865a-906ae853b15a(a)f1g2000prf.googlegroups.com... >> > On Nov 18, 12:20 pm, Doug <Doug_Ell...(a)yho.com> wrote: >> >> I'm actually having a hard time thinking of a situation in which one >> >> would capitalize a point-of-sale Sales Tax payment. Maybe there is >> >> one. >> > >> > Well, from a strict theory standpoint, R.C. White expressed the >> > accounting convention correctly, so there's actually lots of >> > situations where you'd capitalize sales taxes. Quicken gives you the >> > flexibility to be conventional or unconventional in your >> > accounting. :-) >> >> I agree. >> >> Sometimes it's hard to recall that Quicken was designed as a checkbook >> program. It took a very pragmatic approach, ignoring accounting theory >> in >> many ways. >> >> >> Many of my purchases involve a mix of taxable and non-taxable items. >> >> So >> >> when for example I'm splitting a Costco bill, I might have some >> >> portion >> >> categorized as groceries, some as clothing, and some as medicine. In >> >> my >> >> state, groceries aren't subject to sales tax, so if Quicken >> >> apportioned >> >> the sales taxes to all the split categories, that would be incorrect >> >> also. >> >> > You've expressed the most significant problem to the "really easy to >> > implement" process of automatic allocation of sales tax. In >> > California, unprepared food items sold at supermarkets are not taxed >> > but ready-to-eat hot foods are taxed, as are soft drinks and cat >> > food. But, for my accounting, it's all "food" and the only way an >> > automatic allocation of sales tax could work is if I set up two >> > categories of "food" - maybe "food non-taxed" and "food taxed" and >> > then Quicken supplied a check box in the category setup that >> > identified each category as to sales tax eligibility. Depending on >> > how you categorize purchases, where you shop, and your local sales tax >> > structure you could end up with dozens of categories you'd have to >> > identify this way. >> >> I practiced public accounting in California for 18 years (1962-1980) and >> had >> plenty of experience with the sales tax, both professionally and >> personally. >> Then I lived and practiced in Oklahoma for 10 years; the sales tax rules >> were mostly the same. Now I've been in Texas for nearly 20 years, but >> retired, so my experience here is only personal, not professional - but >> the >> general sales tax rules are still similar. "Groceries" are not taxable, >> but >> meals and some prepared foods are. As you said, a Quicken programmer >> would >> have to deal with "dozens of categories" in trying to program automatic >> allocation of sales taxes - and then we users would have to classify each >> multi-item purchase receipt to match those! Can you imagine how much WE >> would gripe about that inconvenience? >> >> >> But I still come back to the notion that Quicken can't be expected to >> >> read my mind. It has to be programmed with some conventions in mind, >> >> and the conventions Intuit used are vaguely based upon bookkeeping >> >> principles. My recollection is that this thread began with a new >> >> Quicken user asking why Q didn't let him do something that Microsoft >> >> Money did let him do. The only reasonable answer is that Intuit >> >> didn't >> >> write the software that way because they didn't think anyone >> >> would/should want to falsely categorize an expense. >> > >> > Nah, that's not the case. Accounting conventions are certainly *not* >> > what drives the programming at Quicken; it's much more the "black >> > letter" government rules and and regulations, e.g., capitalizing the >> > "expense" of broker's fees in your stock basis. I've complained here >> > before, many times, that Quicken should have a lot more accountants >> > working on the product to catch improper accounting that's "built in" >> > by the programmers. >> >> Tax laws are written by legislators - and very few of those are >> accountants. >> That's why so many corporations have to keep more than one set of books. >> One set is kept according to accounting principles developed over >> centuries >> by accountants who were trying to report accurately the results of >> business >> activities. The other set is kept according to laws, which are concerned >> with producing tax revenues and - more and more in recent decades - with >> motivating taxpayers to act in certain ways that lawmakers want us to >> behave. These tax provisions very often do not conform with accounting >> principles! They don't have to make sense; they are the LAW! :^{ >> >> Even if tax laws allow you to deduct the sales tax you pay on your new >> car >> or computer or shirt or candy bar, the tax on that transaction is still a >> part of the cost - to you - of buying that property. >> >> Accounting theory has evolved over the centuries, but I suspect that, >> even >> at the "University of Connecticut, many years ago", that is what was >> being >> taught in accounting theory classes. That's what I was taught at the >> University of Oklahoma in the 1950's (BBA in Accounting, 1956). And I'm >> pretty sure that is what today's students are learning. >> >> > Tom Young >> >> RC |