"Unrealized Losses" in Trial Balance Report

Fri Mar 23 00:47:36 EDT 2018

HI all,

Thanks everyone for your thoughts. Once I see what my accountant does with these foreign currency transactions, I will try entering them back into GnuCash and see what happens. 

A message from Christopher mentioned stocks and capital gains. I don't have any stocks in my books, but as I mentioned I do have a small gain or loss due to currency conversion. I'm working with my accountant on this. What's so strange about this "Unrealized losses" line that appeared in the trial balance is that it's so much larger than any gain or loss that I have from currency conversion. However, the "Unrealized losses" line could disappear when I account for these currency exchange gains or losses correctly. 

Adrien asked if I have Trading Accounts enabled. I didn't know about this feature, and I see that I have it turned off. I turned it on and re-generated my Trial Balance, but I didn't see any difference.

Cheers,
Richard

----------------------------

On 23/3/18, 2:25 AM, "gnucash-user on behalf of Adrien Monteleone" <gnucash-user-bounces+richardcd73=gmail.com at gnucash.org on behalf of adrien.monteleone at gmail.com> wrote:

    The rounding error I found can be very large depending on the variance between the exchange rate for each transaction and the date of the report. But, I don’t think it affects anything else, because it’s a function of the report, not any math Gnucash otherwise performs. And I’ve never seen this discrepancy anywhere else. Others are using multiple currencies without major issue, so I don’t think overall that there’s any danger. Perhaps someone who routinely uses multiple currencies AND performs Trial Balance reports could weigh in.

    As for the Unrealized line, do you have Trading Accounts enabled by chance? I’d have to play with it, but perhaps that is why you are seeing that line at all. (I have it on in my book) I don’t know the implications of turning that off once it’s on. One of the more seasoned users or developers would have to chime in.

    However, you can ‘adjust it out’ if need be. (that’s the purpose of a trial-balance, to determine what if any adjusting entries need to be made) In this case, you won’t be making any actual transaction entries in Gnucash - just on the Trial Balance.

    Check this out:

    Trial Balance Total Debits - Trial Balance Total Credits + Unrealized(+Gain, -Loss) = rounding error (or zero if no error)

    If this equation holds true for your Trial Balance Report, then you are otherwise in balance. If not, then you really do have an error somewhere that you need to correct/adjust for.

    To determine the actual rounding error, open the foreign currency asset account. Add up all of the entries in the native currency. (If you have Trading Accounts on, you’ll see two debits and credits for each transaction, one in the native currency of the book, and one in the foreign currency of the account) Then subtract balance of this account found on the trial balance. The result is the rounding error. So for example if the sum of your SGD entries is debit S$1100 and the Trial Balance report says the account is really debit S$1000, then the rounding error is S$100.

    So if the result of Total Debits - Total Credits - Unrealized Loss = S$100, then you are otherwise in balance.

    I’ve tried several reports to do this math for me to no avail. Probably the closest is the Account report, but that doesn’t give totals in the native currency, only the foreign currency set for that account. I suppose though it would be trivial enough to copy/export to a spreadsheet to generate that figure. My XAG account only has about 10 entries, so I don’t mind doing the calculator math. 

    Regards,
    Adrien

    > On Mar 22, 2018, at 4:42 AM, Richard <richardcd73 at gmail.com> wrote:
    > 
    > Thanks for your thoughts, Adrien.
    > 
    > Yes, I do have losses from changes in exchange rates between when I booked a currency and the date of the report. However, these changes were tiny compared to the "Unrealized Losses" figure that appeared in the Trial Balance report. So, while I agree that this report shouldn't show virtual accounts, the bigger question in my mind is, "Where did this number come from?" That's still a mystery to me, but the use of multiple currencies is definitely a trigger. As soon as I remove all transactions in a foreign currency, this line disappears from the report.
    > 
    > About this rounding bug you described: are you sure this affects only the Trial Balance report? I'm worried that this could cause a lot of other problems. 
    > 
    > It sounds like I have to give up on putting foreign currency transactions in my GnuCash books until these problems are fixed. I see your point that Trial Balances should not be necessary, but I don't think I'm likely to get my accountant to change her ways because GnuCash won't generate the reports she wants, and I'm not quite ready to go looking for a new accountant! 
    > 
    > Thanks,
    > Richard
    > 
    > ----------------------------
    > 
    > On 22/3/18, 2:22 PM, "gnucash-user on behalf of Adrien Monteleone" <gnucash-user-bounces+richardcd73=gmail.com at gnucash.org on behalf of adrien.monteleone at gmail.com> wrote:
    > 
    >    You might see unrealized losses with multiple currencies to account for the change in value between the time you booked a currency and the date of the report.
    > 
    >    So if you converted some SGD to USD at some particular exchange rate, and that rate has since changed (very likely) then you will either have a gain or loss (depending on the direction of the change) that is yet unrealized because you haven’t converted the USD back to SGD. If you did convert them back, the loss or gain would be realized in the conversion transaction.
    > 
    >    But I’m not sure why the report shows the unrealized figures at all. It really doesn’t belong in there unless I don’t understand ’trial balance’ properly. It should be showing you the balance of ACTUAL accounts, not virtual ones.
    > 
    >    What’s worse, even without that figure, I also discovered that you can get an imbalanced result here even if the value hasn’t changed. There is a rounding bug that kicks in because the report takes the newer value based on a rounded total of the foreign currency. But the asset account register for that currency only rounds the display, not the actual figures. The cumulative effect can be a gain/loss of several currency units over a 2 year period.(noted in that thread you linked) So if you have multiple currencies, this report is most likely going to be wrong.
    > 
    >    Really, the report is not necessary any longer using computers instead of paper books. The purpose of the trial balance is to check your books before you close them. But you don’t need to close your books with Gnucash. If you are closing, you want to make sure everything is correct because the process of closing wipes out some accounts back to zero, effectively ‘erasing’ their history. (or rather, fixing their history as a single end-of-period figure, rather than individual transactions) In the days of paper, this was necessary as part of the process of creating the basic financial statements. But with Gnucash, you don’t need to close the books in order to generate those financial statements. (Income Statement, Balance Sheet, etc.) You can generate those reports at any time.
    > 
    >    Regards,
    >    Adrien
    > 
    >> On Mar 22, 2018, at 1:02 AM, Richard <richardcd73 at gmail.com> wrote:
    >> 
    >> Hi there,
    >> 
    >> 
    >> 
    >> I’ve been using GnuCash for about a year to run a small business in Singapore. I’m thrilled that it has worked so well, since I have no accounting experience, but I’m trying to create a Trial Balance report for my accountant, and I can’t get it to work right. At the bottom of the report there is  a line showing “Unrealized Losses” of S$230.42, which seems to have come out of nowhere. Note that this line does not correspond to any account, but is something that the report has automatically added, and it is causing a mismatch between Debits and Credits. Does anyone know why a Trial Balance report would show a line like this? Is this a bug? I saw the following conversation on gnucash-dev that seems to be discussing something similar, but I’m not sure.
    >> 
    >> 
    >> 
    >> http://gnucash.1415818.n4.nabble.com/Re-trial-balance-how-to-find-mismatch-question-td4697393i20.html
    >> 
    >> 
    >> 
    >> There are a few other things to note about my situation. First, I should say that I’m running GnuCash 2.6.19 on Mac OS 10.13.3. Second, I have no investment accounts or stocks in this set of accounts, so I don’t have any unrealized losses due to that. Finally, I am using two currencies (USD and SGD), and I do have a small loss (of S$3.58 I think) that I have not yet accounted for. I saw mention of multiple currencies in the thread I linked to above. Could this be causing the problem?
    >> 
    >> 
    >> 
    >> Thanks for any help or advice. I’m hoping to get around this problem and close my books for 2017.
    >> 
    >> -Richard 
    >> 
    >> 
    >> 
    >> ----------------------------
    >> 
    >> Richard 
    >> 
    >> richardcd73 at gmail.com
    >> 
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