accounting for stock trades

[Phillip Shelton]

It may not be an expense. But I hope to gain "income" from that Delta or I =
would not be in the market for shares.

-----Original Message-----
From: Derek Atkins [mailto:warlord@MIT.EDU]
Sent: Friday, 3 January 2003 7:07 AM
To: David Hampton
Cc: Ed Warnicke; gnucash-devel@gnucash.org
Subject: Re: accounting for stock trades


David Hampton <hampton@employees.org> writes:

> The problem is that gnucash is creating/destroying money in stock
> accounts.  For example, I transfer $100 from income into a stock account
> and buy 10 shares of CSCO at $10 each.  The next day I sell those shares
> at $11, and transfer $110 out of the stock account to a cash account.  I
> have a net $10 gain, but that gain is not posted to an income account
> and cannot be posted to an income account given the current state of
> gnucash. It has simply been created out of thin air.  Try this in a
> brand new account tree and you'll see that after two transactions, total
> income is $100 but total assets is $110.

Sure, but I could also buy $10 shares of CSCO at $10 each and then
sell them at 12EUR each..  So what?  Does that mean that every time we
have a multi-currency (or multi-commodity) transaction that we need to
supply an income/expense split as well?  That sounds rather, um,
unpleasant.

The gain/loss is due to the change in price (or change in exchange
rate) between the two commodities (in your example, USD and CSCO, in
my example USD, CSCO, and EUR).  Delta-Exchange-Rate is not an income
or an expense.

> David

-derek

--=20
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
       warlord@MIT.EDU                        PGP key available
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