Where to record business equity in your personal books

[Adrien Monteleone]

David,

I understood the tone just fine. No worries. And certainly, yes, an investment should be an asset. (hopefully) I just found it odd that in all my searching for the answer not a single source even addressed the perspective of the personal books of the investor. I did find a chart of accounts that listed “Other Long Term Investments” but I was surprised to not see something more specific for this case since it is so common. After all, there are specific account terms for so many other asset classes, including investments.

I thought perhaps I was just unlucky in my search engine foo and was somehow missing the answer.

Certainly, it isn’t critical as long as the account name is descriptive enough, I just wanted to follow an accepted practice if there was one.

I’d ask an accountant, but I don’t have one. Presently, the concern is just a hobby among friends though we have ideas and plans to turn it into a commercial venture one day. I want to start our books off right, so that when we make the transition we’ll have some ducks in a row so to speak.

Regards,
Adrien

> On Jun 19, 2017, at 10:44 PM, DaveC49 <davidcousens at bigpond.com> wrote:
> 
> Hi Adrein,
> 
> I apologise if my comment appeared a bit flippant. The intention of my
> comment about choosing any name was really that the actual name is less
> important than the structural aspect of it being an asset account. The
> general expectation would be that an investment in a business would
> hopefully be an asset rather than a liability otherwise it would be very
> unwise to make the investment in the first place. 
> 
> As long as the name is descriptive of the function of the account, then as
> Liz has pointed out, it can be easily renamed should your accountant wish to
> use a name that fits better with local accounting/legislative practice.
> 
> The beauty of standardized names is however that one can quickly make sense
> of and understand a balance sheet or profit and loss statement produced by
> someone else which is important for public accounting but perhaps less of an
> issue for one's own personal accounts.
> 
> Cheers
> 
> David
> 
> 
> 
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