We've seen this quite a bit in our clean-ups. Clients categorizing their transactions "transfer out" or "Transfer in". There are two reasons you do not do this. One, if it's transferring from an account that is in Quickbooks and belongs to the same company, you just enter it as a transfer. This way it's not showing up on your Profit and Loss as a "transfer expense." If it's going to something that is in another company, then it should be labeled as a loan.
If it's going to the owner, then it should be a "distribution" or "loan payback to owner". Depending on the circumstances. But "transfer" doesn't tell the Bookkeeper, CFO Consultant, CPA or owner anything specific when seeing it in a report.
The ONLY time we have done this, is in special occasions when we are doing massive clean-ups and it will disturb other accounts that have already been reconciled. To save the client time and money, we leave as is and ensure going forward that categories and reports are more accurate and specific.
If you are wondering whether you've done your books right, you can receive an introductory offer for us to review them with you and get a program to revise them more efficiently.
Contact our office and let us know if you need help.