[GNC] Bad account setup in Guide §12; was: Should i create "Equity Account" for each currency I had ?

[David Cousens]

Frank,

I think the problem is that Chapter was written before the introduction of
trading accounts and really doesn't treat them well. I would propose having
an additional section dealing with Trading accounts and their use in dealing
with capital gains as well as the existing approach of doing the
calculations manually.
 Trading accounts  AFAIK are not treated at all in the guide just on the
wiki.

I do not think Long's original basis for criticism is totally valid however
the need to update and make it clearer is. (see my reponse to a later post
in this thread) It is quite valid to have Opening accounts for foreign
currencies and it does not or at least should not affect whether the trading
accounts calculate the capital gains. One thing that is a bit deficient at
present is that the Balance Sheet report, if you choose to display 3-4
levels does not display the trading account values broken out in their
original currencies, converted to the book currency and then totalled as it
does for Asset and Equity accounts. I am also concerned that Trading Gains
and Losses are reported in a Balance Sheet. In accounting terms they are
really like Income and expense accounts - specific accounts split out from
Equity to simplify the traetment of capital gains/losses which are really
profit/loss and should perhaps better appear in the Income Statement
although in their own section as they usually receive a different tax
treatment form operating profit and loss. 

I will raise these questions  with Christopher Lam as a separate issue.  In
answering Long's questions I have gained a better appreciation of trading
accounts in capital gains. I am happy to have a go at rewriting this section
of the guide and perhaps an additional section on Trading Accounts, but I
would like to seek some help from someone who is actively using trading
accounts to review anything I write.  It may take a month or two as I have
some other committments in the short term I have to catch up with.

David



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David Cousens
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