Trading accounts - when do they make sense?

[whwtan]

Hi Mike,

BTW, your name is raised up in Peter's article for being "The One" 
getting trading accounts up in gnucash. So thank you...:D

I just need to figure out how it works. *scratch head*

Mike, can I clarify whether this is possible before I sit down to study 
Peter's tutorial and the GnuCash user guide again?

I work with 3 currencies quite often and would be fine going through all 
the effort of setting up 20 x 3 accounts to get things working. But at 
the end of the day, I would like to be able to come up with 3 reports 
for myself which each in those different currencies. The biggest problem 
with SSAP as described by Peter is that it locks you dead into a primary 
currency.

Sometimes I ask myself, "I wonder how my balance sheet and expenses are 
like if I look at myself in USD today."
And tomorrow I'd ask myself, "Hmm, how does it look in AUD?"

I'm not trying being fickle here. I've always psyched myself to call 
wherever I am staying "Home" so my primary currency actually changes. I 
know that is not what tax departments care about or how accountants work 
but I've always been interested in knowing where I stand myself financially.

Modern professional accounting software lock you into SSAP (For a good 
reason since you're probably buying it to do accounting) yet the whole 
explanation by Peter seems so much more logical. That we should not be 
locked to a currency and everything is relative to another.

Warmest Regards,
William

On 9/7/2012 12:22 PM, Mike Alexander wrote:
> On Aug 29, 2012, at 6:39 PM, Mark wrote:
>
>> 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)?
> Yes, if you are doing cross currency transactions, i.e., if you have transactions where not all splits are in the same currency.  In this case you are effectively moving money from one currency to another.
>
>> * Does the trading account affect any of the reports (net worth bottom
>>    line, etc)? Or is the trading account balance not really considered
>>    anywhere?
> I believe that the balance sheet reports are affected by trading accounts, but most others are not, but I can't remember for sure.
>
>> * Does it make sense to use trading accounts in my case?
> Probably, but that's really up to you.
>
>> * 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 keep a different expense sub-account for each currency.  If I (for example) pay for a restaurant in England with an American credit card, then this is a cross currency transaction from the USD credit card to a GBP expense account and involves trading accounts.  However if I pay for this meal with a British credit card then it involves only one currency.  This seems to work well for me, but it's no doubt not the only (or even necessarily the best) way to do it.
>
>              Mike
>   
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