Expense and Income Categories
Expense and Income categories allow you the flexiblility to track your finances in nearly any way you choose. While bank, credit card, investment, asset, liability, and loan accounts track WHERE your money is being spent, expense and income accounts allow you track HOW your money is being spent.
Expense and Income accounts should be thought of as categories for transactions. For example, if you have an expense account or category to track your spending on music CDs called "Personal: Music," you can select that as the category for all transactions that relate to your spending on CDs. These transactions will then also appear in your "Personal: Music" account, so you can see all of your music CD expenditures in one place.
It is important to note that Moneydance lets your income and expense categories have most of the capabilities of checking account: it has a balance and a list of transactions as payments and deposits. However, when you are viewing an expense or income account, these transactions' category will reflect the original source of the transaction, such as the checking account from which you paid for your music CDs.
Therefore, it is generally not a good idea to enter transactions directly into Income or Expense accounts, since they do not represent where your money changes hands.
Your list of Income and Expense categories is completely up to your discretion - you can add, edit, and delete them at will. The more income/expense categories you create, the more specific you can be about how you spend and receive your money.