[GNC] Switching to trading accounts in existing database

Christopher Lam christopher.lck at gmail.com
Thu Jan 21 23:54:25 EST 2021


https://www.accaglobal.com/us/en/technical-activities/technical-resources-search/2015/march/frs102-foreign-currency-translation.html

This is all I can offer in supporting information. Experienced users can
undoubtedly offer more.

On Fri, 22 Jan 2021, 12:36 pm will at theprescotts.com, <will at theprescotts.com>
wrote:

> 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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