[GNC] Why does the sample "investments" account tree have intermediate "Bond", "Mutual Fund", and "Stock" accounts?

[Kalpesh Patel]

Jim,

 

In my case I actually have additional intermediate accounts like so:

 

* Assets

     o Investments

         + Brokerage account

             # Bond

             # Mutual Fund

                 - Fidler

                    * FXAIX

                 - Vans

                    * VFIAX

             # Stock

                 - Fidler

                    * AMZN

                 - Vans

                    * AMZN

 

 

 

In my case it allows me to track my transactions accurately in terms of
dates (as David T hinted) since I can enter in my bank account to say for
example I transferred $500 from '/Asset/Current Assets/Checking Account/ABC
Bank' to intermediary account '/Assets/Investments/Brokerage Account/Mutual
Fund/Fidler' account and then some time later I can purchase mutual funds
from the cash that was in the '/Assets/Investments/Brokerage Account/Mutual
Fund/Fidler' account into '/Assets/Investments/Brokerage Account/Mutual
Fund/Fidler/FXAIX' mutual fund. Now my ledger with respect to bank and
brokerage account is accurate in terms of when Fidler withdrew the monies
from the bank versus when I actually bought the mutual funds from Fidler.
Same concept would go for stocks or any other type of security.

 

This is a bit loose in terms of transaction for withdrawal of the monies
from the bank account. If you want to have an exact ledger in your account
as institutions and have provision to account for transfer time between
institutions (ie transfer of monies from bank to brokerage account) then it
would be total of six transactions: a withdrawal of cash from a bank account
into a general purpose contra account, general purpose contra account into
to intermediary brokerage account and then finally from intermediary
brokerage account into security account.   

 

Now in the accounts page I can see what my situation is like for mutual
funds, stocks, bond, etc.

 

Hope this helps.

 

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Message: 5

Date: Sun, 14 Aug 2022 08:57:59 +0300

From: "David T." <sunfish62 at yahoo.com>

To: gnucash-user at gnucash.org, Jim DeLaHunt <list+gnucash at jdlh.com>,

                Gnucash Users <gnucash-user at gnucash.org>

Subject: Re: [GNC] Why does the sample "investments" account tree have

                intermediate "Bond", "Mutual Fund", and "Stock" accounts?

Message-ID: <BC7865A3-BB01-4D43-A790-6B91F4D75DA6 at yahoo.com>

Content-Type: text/plain; charset=utf-8

 

Jim, 

 

I'll address a little of this from my non-technical, non-accountant
perspective. 

 

I don't know the rationale behind those intermediate accounts, and I don't
use them. That said, each investment type behaves a little differently, and
perhaps separating them makes some operations easier to manage. But I don't
know. 

 

As for the main brokerage account question, I will say that I mostly have
followed the template format and put cash transactions into it, without
noticeable problem. There is a camp of Gnucash users who feel strongly that
one should only put transactions into leaf (lowest layer) accounts, and one
of them will explain their reasoning, I'm sure.  

 

I've experimented with using a subaccount for these transactions, but I
don't like trying to find that cash account later on, since it ends up
embedded in the alphabetical sequence of accounts. I could kludge the name
for the cash account to bring it to the top, but that just annoys my
aesthetic. 

 

(For the record, I use account codes for most accounts, but not for
commodities, and let commodity accounts sort by name. Assigning codes for
commodities accounts is cumbersome, given a large set of
commodities/accounts. Ideally, I'd assign a code just to the cash account
and get it at the top, but the sorting puts nothing before something,
leaving the cash account at the bottom. I don't know if I can sort by
account type, but even if I did, I don't know how I'd sort the chart by code
and then type...)

 

Best,

David

 

On August 14, 2022 4:40:17 AM GMT+03:00, Jim DeLaHunt
<list+gnucash at jdlh.com> wrote:

>Hello, folks:

> 

>I have been using GnuCash for a long time, starting with the GnuCash
template account tree and modifying it gradually, but never thinking hard
about it. Until now. I am adding a bunch of investment accounts. This makes
me look more closely at the template account structure depicted in
<https://www.gnucash.org/docs/v4/C/gnucash-guide/invest-setup1.html>.

> 

>This structure is:

> 

> * Assets

>     o Investments

>         + Brokerage account

>             # Bond

>             # Mutual Fund

>             # Stock

>                 * AMZN

> 

>What is the reason for the template inserting the layer of subaccounts
between "Brokerage account" and "AMZN" (for Amazon.com stock)? Why shouldn't
the child accounts denominated in each security be directly under the
"Brokerage account" account (as long as the parent account is denominated in
the currency which the securities are priced in)?

> 

>For my own purposes, it seems simpler to me to have the per-security child
accounts be directly under the "Brokerage account". Is there a rationale for
the intermediate accounts which I am missing?

> 

>Also, in the template, the "Brokerage account" is of type "Bank", and 

>is not a placeholder. That seems to imply that cash and cash-equivalent 

>transactions should be applied directly to "Brokerage account". Somehow 

>I ended up making a child account "Cash CAD" (or "Cash USD", or 

>whichever), and applying all the cash-equivalent transaction there. My 

>equivalent of "Brokerage account" has no transactions, and is often a 

>placeholder account, and has account type "Asset" rather than "Bank".?? 

>Is there a reason to put the cash transactions directly in the 

>brokerage account, or is this a matter of personal preference? (In 

>which case, I will keep the structure I have.)

> 

>Thank you in advance for your insight,

>???? ?Jim DeLaHunt

> 

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