Stocks and Balancing Accounts

[Charles Day]

On Sun, Jun 15, 2008 at 10:49 AM, Daniel Carrera <daniel.carrera at zmsl.com>
wrote:

> 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.
>

Well hopefully it will all get easier sometime later this year. I hope to
create a more automated way to buy and sell securities after finishing up my
work on the QIF importer.

-Charles


> 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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>