accounting for stock trades

[Derek Atkins]

There is a big difference between gaining income by increasing your
money, and gaining income via an "income account".  Currently it is
possible to "gain income" through stocks WITHOUT using an income
account.

-derek

"Phillip Shelton" <shelton@usq.edu.au> writes:

> 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
> 
> -- 
>        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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-- 
       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