Entering Stock Information

[David Hampton]

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Double entry isn't that hard.  Think in terms of your bank account for a
moment. You can't create money out of thin air, and you can't destroy it
(unless you literally burn it.)  This means that for any transaction
where you receive money, that money must have some source.  If the money
came from your employer, your friend gave it to you, or you found it in
the street, then the source of the money is an income account.  If you
took out a loan, borrowed the money from a friend, or took an advance on
a credit card then the source of the money is a liability account.  If
you received the money from the sale of a car or the sale of stock, then
the source of the money would be an asset account.  On the other hand,
if you are spending money then the money has to go somewhere.  If you
bought groceries or a book, the destination for your money would be an
expense account.  If you paid down a credit card, the destination would
be a liability account.  If you bought a car or bought stock, the
destination for the money would be an asset account.=20

Transactions can also have multiple destinations for your money.  When
you pay your house loan, part of the payment goes to pay down the
principal on the house (a liabaility since you owe that money to
someone) and part goes to pay for the interest on the loan (an expense
to you for the convenience [cough] of the loan).  This is a split
transaction.=20

One thing you need to remember, income and liability accounts will show
the opposite sign from what you would expect. This is standard
accounting practice.  I'm not sure why it is this way.  For example,
when you record your paycheck, the source of the money will be an income
(salary) account and the destination will be an asset (checking)
account.  Instead of one value increasing and the other decreasing, the
balances of both accounts will increase in value. My wife says this is
because you are increasing the amount of money in your bank account, and
you are increasing the amount of money that you have earned.

On to the question of your stock transaction.  Stock accounts are a
little funny in that their balances are in terms of shares of stock not
dollars.  You will need to have a parent account to represent the
brokerage account as a whole.  If you enter the stock purchase in the
stock (not brokerage) account window, and then enter a current price for
that stock in the price editor, you will see the value of those shares
appear in the brokerage account.  I.E.=20

  Buy 20 shares of Acme (ACME) at $10 a share.=20
  Enter a current price of $15 for Acme=20
  Your accounts should show:=20

  Assets			$xxx.xx
    Brokerage Account		$300.00=20
        Acme			20 ACME
    Other Accounts		$yyy.yy

  Income			$zzz.zz=20
    Gifts Received		$200.00
    Other Income		$aaa.aa
=20

(The above should be in two columns to mimic the account register
window.  It looked funny when I printed a copy.)

David=20

 =20
On Fri, 2002-01-25 at 14:19, Michael Ward Cole wrote:=20
> Yes, I believe that you are correct.  I guess maybe I don't understand
> this double entry stuff as much as I thought that I did.  I already have
> an account in Income:Gifts Received.  Is the idea that I put the total
> amount of the stock value in this account first and then transfer that
> amount to the particular stock account entry?  I entered the particular
> information and came up with a total in the Income:Gifts account but not
> in the Stock account.  In the stock account, I entered the dollar amount
> in the Buy column.  Oh well.  Or....
> should I have a negative value in Income:Gifts when I transfer the funds
> to the Stock account...or am I just so confused that I should go play
> mahjongg for a while.
> Thanks,
> Michael

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