investment terminology and types

[Jon Lapham]

David Ayers wrote:
 > [snip]
> If I understand what you all are saying, for an investment
> account with check writing privileges I could set up the cash balance as
> a bank account and also include the same cash balance in the investment
> account so the interest will be included in investment return. Am I
> reading you correctly?

Nope.  :)  That setup would double your equity... which I *wish* were 
possible, but unfortunately not.

The setup you need is very simple, just make your checking account and 
occasionally when you receive interest, add the interest to this 
checking account from an income account called "interest".  (of course, 
there are a million variations on this theme, salt to taste).

-Assets
    -Checking
-Income
    -Interest

There really isn't much more you can do.

The whole "interest as investment" discussion was really only for people 
that have interest bearing investments, such as CDs and money market 
accounts.

> When entering the interest income from the account statement, I assume
> this can be handled with a single transaction with debits and credits to
> the proper accounts. Is this right?

Yes, a single transaction, moving the money from the Income:Interest 
account to the Asset:Checking account.  Very simple.


-- 
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  Jon Lapham  <lapham at extracta.com.br>          Rio de Janeiro, Brasil
  Work: Extracta Moléculas Naturais SA     http://www.extracta.com.br/
  Web: http://www.jandr.org/
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