[GNC] Switching to trading accounts in existing database

[will at theprescotts.com]

I am probably missing something here.

I have bank accounts in two countries and regularly transfer money between them. Whenever I move money, I record the transaction and the amount for each side of the transaction. Gnucash automatically makes an entry in the Price Database recording the conversion rate.

It seems much cleaner than treating one currency or the other as a commodity that is bought or sold at some rate. One thing that is a little strange is that the Price Database has separate tables for each direction. I suppose it depends on which side of the transaction I use to record the transfer. But I almost never look at the Price Database so it doesn't bother me much.

Will

On 2021 Jan 21, at 01-21 20:06:04, Lukas Haase <lukashaase at gmx.at> wrote:

Hi Christopher,

This is very sad. Sad for various reasons.

I went over these documents previously (but did not read them thoroughly).

My takeaway is:
* Storing the conversion rate per transaction makes the accounting equation as a function of time inconsistent (but it is consistent for each snaphot in time).
* Trading account accounts for these inaccuracies.

My question was more why the trading accounts (which seem to me the cleaner, superior and better way) are not enabled by default.

Also, can you comment a bit more why precicely this would be a major minefield? (If you know it, of course).

Multiple databases are just extremely hard for some people (like me).

Consider living for a couple of months to a year in a different place. There is just no way to separate this in a clean way without replicating all the transactions in different databases. BTDT.

Also I moved multiple times. Even then, there is no clear cut: Initially I would use credit cards, ATM etc. from previous country. Even the first or second rent may be partially paid with funds from the previous location. It takes a few months until I could consider the books between two countries sufficiently separate. The only ways are a) Massive transaction Replication b) booking everything I pay with funds from old country into old database. But with my rent example, it gets very inconsistent how much I paid rent at the new place.

Lastly, simple portfolio accounting (e.g. crypto currencies) if they are bought in different countries.

I am curious what the potential mines are so I can try to avoid them.

Lukas



On 2021-01-21 20:20, Christopher Lam wrote:
> Multicurrency is a major minefield.
> Start from https://www.mathstat.dal.ca/~selinger/accounting/tutorial.html
> and finish with
> https://www.mathstat.dal.ca/~selinger/accounting/gnucash.html for the
> background on trading accounts.
> From discussion with accountant, it would seem that the safest approach is
> to have 1 book per home currency. When you move countries you'd be better
> off with a new book with a new home currency. Taking temporary trips abroad
> gets the currencies translated to home currency. AFAIU. IANAA YMMV.
> https://techcrunch.com/2010/08/14/internet-must-be-true/
> On Fri, 22 Jan 2021 at 00:59, Lukas Haase <lukashaase at gmx.at> wrote:
>> Hi Mike,
>> 
>> On 2021-01-21 02:24, Mike Alexander wrote:
>>> On 19 Jan 2021, at 20:08, Lukas Haase wrote:
>>> 
>>>> So I got recommended using trading accounts. But suddenly all my
>>>> previous multi-currency transactions get a small grey box with a cross
>>>> (hinting the transaction is inconsistent).
>>>> 
>>>> How do I best deal with this?
>>>> Is it possible to keep my old multi currency transactions as-is and
>>>> use trading accounts only for securities/stocks?
>>>> 
>>>> If not, how do I migrate while ensuring my ten years worth of data
>>>> does not suddenly get inconsistent?
>>> 
>>> You should be able to use the "Check & Repair" commands in the Actions
>>> menu to add the trading account splits to existing transactions.  I
>>> would certainly save a copy of my data before doing this, and try it on
>>> a few transactions first.  Your situation is complex enough that it is
>>> not unlikely that this won't do exactly what you want, but it's worth a
>>> try assuming you have good backup.
>> 
>> Thank you, I think that worked indeed.
>> 
>> I still need to cross-check everything (at the first glance things look
>> OK).
>> 
>> So then I'd have a general question on the multi currency feature:
>> 
>> 1.) Are "Trading Accounts" just an *alternative* way to handle multi
>> currencies (and as such have nothing to do with "trading")?
>> 
>> 2.) Trading Account seem to be way more powerful than storing the
>> exchange rate in each transaction
>> 
>> 3.) Why exactly aren't they enabled by default if they are so superior?
>> Why let people my default use the way that makes things less consistent
>> and error-prone?
>> 
>> Thanks,
>> Lukas
>> 
>> 
>> 
>> 
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