Stocks and Balancing Accounts

[Daniel Carrera]

Another thing about this page:

http://svn.gnucash.org/docs/guide/invest-sell1.html

I have no idea what those tables mean. I don't understand what they are 
trying to say.

Charles Day wrote:
> On Sun, Jun 15, 2008 at 4:05 AM, Daniel Carrera <daniel.carrera at zmsl.com 
> <mailto:daniel.carrera at zmsl.com>> wrote:
> 
>     Hello,
> 
>     I want to buy stocks, but I fear that GnuCash won't handle stock prices
>     properly. Suppose I own stock XYZ valued at $1050 but GnuCash only has a
>     record of me putting in $1000. The other $50 are stock appreciation. In
>     this scenario, the accounts won't balance.
> 
> 
> If you've only recorded your purchase at $1000 per share, then your 
> books should still be in balance.
> 
> If you then add a price of $1050 to the price editor, to reflect the 
> current price, then reporting ought to show a total value of $1050 per 
> share with $50 per share being an "unrealized gain".
>  
> 
>     In the ideal world, GnuCash should realize that changes in stock prices
>     are capital gains or loses, that that's a type of income, and that the
>     accounts do balance. But GnuCash won't do that.
> 
> 
> Doesn't the advanced portfolio report show unrealized gains? (I'm not sure.)
>  
> 
>     How do you deal with this problem?
> 
>     I encountered a similar problem earlier with currencies. The way I dealt
>     with that was to create a bunch of "Currency" accounts. So, for
>     instance, if I wanted to exchange $1500 USD for 1000 EUR I would do
>     this:
> 
>     1. Transfer 1500 USD from "Banks > My US Bank" to "Currency > USD".
>     2. Transfer 1000 EUR from "Currency > EUR" to "Banks > My EU Bank".
> 
>     I don't love this method, but it works well enough.
> 
> 
> Stocks and currencies are basically identical as far as buying and 
> selling are concerned. To keep the books in balance, you just have to 
> make sure that when you sell any quantity of securities or foreign 
> currency that you account for capital gains or losses in your "home" 
> currency (USD in your example). There is an explanation of how to do 
> this for stocks in the documentation (which applies equally to currencies).
>  
> 
>     But what do I do with stocks? Do I have to make a separate "Currency"
>     account for each and every stock I want to buy? Is that the solution?
> 
>     Thanks
>     Daniel
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