Trading accounts - when do they make sense?

[whwtan]

Hi Mark,

I would love to work this out with you as well.
Peter's tutorial convinced me to use gnucash over far more expensive 
commercial software but I have not been able to figure out how trading 
accounts work.

Similar to you, I work on projects in different countries and would 
spend time in USA, Australia and Singapore so I have bank accounts in 3.

Your description of how you set up your accounts is precisely the way I 
tried to set up my system as well. Big bills which come annually would 
be separated into their currencies but everyday expenses would be 
grouped into just "dining" or "entertainment" itself.

The problem is trying to make it work.
In the end, I gave up and wound up making a huge painstaking list of 
seperating all the expenses by currencies first. This seems to be 
different from what I thought gnucash was supposed to be so I figured I 
just haven't figured it out yet.

There is extremely sparse information on what and how trading accounts 
work, I only knew about it and enabled it because of Peter's tutorial. 
[Well, I thought I've come across the holy grail there but it seems like 
the powers above only help those who help themselves. :P]

William

On 8/30/2012 6:39 AM, Mark wrote:
> Hello,
>
> I have played a little more with trading accounts and now have some 
> fundamental questions.
> First the background story:
> I live both in the US and in Germany. So I have bank accounts in both 
> EUR and USD and also expenses in both currencies.
>
> For handling those accounts, I have two options:
>
> 1. For some expenses (e.g. insurance), for which I want to US vs DE
>    keep apart, I set up two sub-accounts Expenses:Insurance:DE and
>    Expenses:Insurance:US (and possibly more accounts as sub-accounts to
>    one of these two)
> 2. For other expenses, which I don't need to keep separate (e.g.
>    Groceries or Dining), I just have one Expenses:Groceries and book
>    both USD and EUR transactions in there
>
> I am using trading accounts for my GnuCash file, although I am not 
> sure if that really makes sense for this scenario. What I noticed was 
> that after entering a bunch of groceries transactions, the balance on 
> the top-most trading account was negative, although I had only entered 
> transactions from a EUR checking account to the USD Expenses:Groceries 
> account. No other transactions were booked in any of the trading 
> accounts. And all of the transactions in all the trading accounts were 
> in one direction only (EUR converted to USD).
>
> So now I am wondering
>
>  * Does it make sense that the trading account balance is not 0,
>    considering that I am not really buying and selling a currency so
>    far (all transactions were EUR->USD only -so just buying, not
>    selling yet)?
>  * Does the trading account affect any of the reports (net worth bottom
>    line, etc)? Or is the trading account balance not really considered
>    anywhere?
>  * Does it make sense to use trading accounts in my case?
>  * Would I be better off to keep my groceries separated into
>    Expenses:Groceries:US and Expenses:Groceries:DE as well in order to
>    avoid multi-currency transactions; and use multi currency
>    transactions with trading accounts only for those cases, for which
>    it really does make sense (although I am not quite sure which
>    transactions that would be)?
>
> I tried to google this, but except for Peter Sellinger's tutorial and 
> the GnuCash basic trading account tutorials, I have not found much...
>
> Thanks,
>
> Mark
>
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