Stock price changes and asset-equity balance

[Maf. King]

On Monday 04 January 2010 23:42:24 you wrote:
> On 10/01/04 00:48, Maf. King wrote:
> > On Sunday 03 January 2010 15:46:39 Clayton Macdonald wrote:
> >> I'm a new user who successfully set up an initial group of accounts such
> >> that assets etc. and equity etc. balanced. Assets consist of stocks;
> >> equity consists of opening balances. Looked good. Eventually, I updated
> >> the current prices of my various stocks and mutual funds using the price
> >> editor. The result was a significant imbalance between assets and
> >> equity, i.e., a price update affects the value of assets but does not
> >> seem to affect the value of equity. I am sure there is something very
> >> obvious that I am missing - or something very stupid that I have done.
> >> Any suggestions?
> >
> > Hi,
> >
> > Would this be a case of "unrealised gains"? - Until you actually sell the
> > stocks, they only have a theoretical value.
> >
> > Welcome to the list and GC, by the way.
> >
> > Maf.
>
> Thanks for the quick reply!
>
> Yes, of course the gains - lately, too often losses - are unrealized in
> terms of cash until the assets (stocks) are sold. Nevertheless, if I
> manually update the price of a stock using the price editor, Gnu Cash
> seems to treat that as a real change in the value of my assets, even if
> unrealized, e.g., if the price of my one share of XYZ Co. goes from $10
> to $5, the total value of my assets drops $5.  But the value of my
> equity does not change. (N.B.: /Assets - Liabilities = Equity + (Income
> - Expenses)...or?) /It seems to me that if my assets are considered to
> have changed in value, then my equity should show a commensurate change
> in value.
>
> In other words, the price editor seems only to affect one side of the
> balance sheet - it changes assets, but does not make any balancing entry
> in equity or other liabilities.
>
> What's the solution? Thanks!


Hi Clayton,

Don't forget to CC your reply to the list, as others are more likely to be 
able to help you than I am....

By "equity" do you mean the "equity branch" of the accounts tree, or a figure 
in a report somewhere?

If it is the former, then that won't change - it is a kind of "placeholder" 
equity for things like opening balances (or year-end closing zeroing 
transactions, or shareholder capital etc.) rather than a real-time total of 
the accounting equation.  

HTH,
Maf.