Stock price changes and asset-equity balance

[Fred Frigerio]

Traditionally I don't think the value of assest is changed on the books like
that. However, I do keep track of that annually for the house and cars.
Essentially I have an Income (House except for last year :0 ) or Expense
(cars). I don't really worry about the stocks until they become a realized
gain or loss. I guess you could do something similar quarterly or as often
as you'd like. I don't believe there is an automated way for GC to track
stocks, etc in the way you (and I) would like.

Fred F


On Tue, Jan 5, 2010 at 1:01 PM, Clayton Macdonald <cm1950 at fastmail.fm>wrote:

> This is the way I see it: Equity is what is owed the owner, i.e., it is a
> liability, just like any other. Assets, on the other hand, are what's
> available for use. N.B. the basic accounting equation: Assets - Liabilities
> = Equity + (Income - Expenses). Alternatively: Assets + Expenses = Equity +
> Liabilities + Income
>
> This is my problem: when I manually update stock prices, the value of the
> asset side of the above equation changes in my GnuCash file. GnuCash does
> not seem able to make any balancing change on the liabilities side of the
> equation.
>
> Maf. King - many thanks! - has been trying to help me see where I'm messing
> up, but I still don't get what I can do except track investments in an
> entirely separate set of accounts and manually transfer changes. Is that the
> only solution? Any advice?
>
>
> On 10/01/05 12:03, Maf. King wrote:
>
>> 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!
>>>
>>>
>>
>>
>> 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.
>>
>>
>
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