No, it does not, you can record both. The one and the only purpose of these switches is to show mathematical sign of budget limit. We know that some welknown software packages separate income and expense categories. AceMoney doesn't and here is why. Let's consider a category named Electronics. For instance, you've got a laptop for $900, but this is a price after $100 mail-in rebate. So, in reality you've spent $1000 (withdrawal on Electronics) and the spending report on Electronics should show this number. Moreover, in our world rebates don't come back sometimes. If you are lucky enough, the rebate check arrives and you deposit it on Electronics to your bank account. The report shows $900, everybody is happy. See, you just got income on the expense category. And this is the very reason why we don't separate income and expense categories. Categories should be free! :-)