Checking, Investments & Savings
What is the difference between checking, investment and savings accounts?
Goldenseal small business accounting software includes three different types of bank accounts for tracking your money assets. Here's how to use each of them:
If you write sequential checks from a bank account, enter it as a Checking account-- even if it's called something else like a "money market" or "share draft" account.
NOTE-- If a bank account is not your money, enter it as an Escrow account. If a bank account usually has a negative balance, enter it as a Loan account, so it will show up on your balance sheet as a liability. If an account is usually positive but occasionally goes negative, you can still consider it a Checking account.
If you want to track expenses for managing an asset, always enter it as an Investment account. You can also use this account class for anything else that would normally be called an investment.
Any of the following might be considered as an Investment account:
Some bank accounts can be listed as either Investment or Savings accounts-- for example, Certificates of Deposit or "money market" accounts from which you don't write sequential checks. In that case, use whichever account class seems most reasonable to you.
Use Savings accounts for simple bank accounts that don't have sequential checks, and for which you don't need to track expenses.
Click here to return to Accounting Software topics.