Questions About Investment Accounts

[John Ralls]

On Apr 5, 2013, at 10:23 AM, Ian Konen <iankonen at gmail.com> wrote:

> On Fri, Apr 5, 2013 at 12:22 PM, Derek Atkins <warlord at mit.edu> wrote:
> 
>> Hi,
>> 
>> Mark Phillips <mark at phillipsmarketing.biz> writes:
>> 
>> 
>>> 
>>> How do I enter these values into gnucash? I don't think I should have an
>>> expense account for Additions and Withdrawals or an Income account for
>>> Income, as these transactions never leave this account. I am really just
>>> interested in see the net change in this account on my balance sheet, and
>>> not have the expenses and income go through my income statement. Would
>> all
>>> the offsetting entries be to some equity account? I think I am really
>>> missing an important concept here.
>> 
>> Yeah, if you want to see the change in value without recording the
>> income or expense then you need to keep track of your shares and see the
>> delta-V by changes in price.
>> 
>> 
> Well now I'm confused.  I don't think I was wrong to say "the accounting
> equation is a mathematical identity", but it does seem like that
> contradicts your answer, at least in this example.  Isn't an increase in
> share prices of a stock you own an income whether you realize the gain or
> not?  I haven't used commodity / share prices in GnuCash myself and hadn't
> though about the implications of changing values, but it seems like you
> could unbalance your books if you don't record the value change as coming
> from an income account.

You're right and so is Derek.

The key is that  "current value" and "book value" are different. Book value (also called "basis") is what you paid when
you bought the security. Current value is what you would have gotten had you sold the security at the price of its most 
recent trade. The difference between the two is the "unrealized gain or loss".

If you maintain a separate account for each security and maintain the price database with its current price then Gnucash
will report the current value on the Accounts page and in the portfolio reports. That's separate from the book value, which
is what's reflected in the register and on the business reports.

So, for the OP, here's how to fake it: Create a bogus security to represent all of the securities in your brokerage account.
You can manually insert fake prices for the bogus security in the Price Editor, and the Accounts page will show the
changing current value of your account as you want. It's utterly useless for anything else, and arguably more work than
actually creating the securities sub-accounts and letting F::Q retrieve the prices for you, but that's a way to do what 
you're asking for.

Just don't show it to your accountant or tell anyone I had anything to do with it. ;-)

Regards,
John Ralls