In this article
Banana Accounting offers a streamlined, integrated approach to investment management directly within a double-entry, multi-currency accounting system, delivering functionality comparable to specialized investment solutions. Designed for organizations and funds managing securities, this solution eliminates the need for separate, costly portfolio management tools, making it ideal for small to mid-sized companies seeking professional, audit-ready reporting.
With Banana Accounting, users can manage all aspects of their investments—from stocks and bonds to other securities—within their core financial accounts in a single, cohesive system. The software combines the precision of double-entry accounting with the sophistication of investment-specific reporting, ensuring that every transaction, whether a purchase, sale, or market adjustment, is accurately recorded and seamlessly integrated.
By embedding investment accounting directly into the accounting structure, Banana Accounting not only reduces the need for spreadsheets but also enhances accuracy and efficiency. Every transaction automatically updates relevant accounts in real time, enabling detailed reports on book value, realized and unrealized gains, currency fluctuations, and more. This integrated approach provides a clear, comprehensive view of your portfolio’s performance, offering the reliability of specialized tools within an intuitive, unified system.
Transactions with Detailed Information
The Transactions Table is central to this seamless integration. Within this table, all relevant details are recorded for each investment transaction, including security IDs, quantities, unit prices, exchange rates, and any associated transaction or commission costs. This design ensures that all information necessary for both financial and investment accounting is captured in a single entry, adhering to double-entry accounting principles.
In the Transactions table the purchase or sale of investment is entered using a compound transaction, so you enter all detail using multiple rows:
- The first line is the Bank account of the transaction.
- Enter the Item identifying the security ID as specified in the Item Table.
The Item is repeated on each line so that the software can associate the information regarding costs, charges, commissions, gains and loss, to the specific investment and pepare reports. - Enter the Quantity and Unit Price and exchange rate.
The software will automatically calculate the amounts and update the accounts value and also the item current quantity. - Bank charges are entered in a separate line.
- When entering sale use separate lines to enter:
- Gain/Loss from investment.
- Gain/Loss from currencies.
- The command Calculate Sale Data will calculate both values based on the historical data, so you can easily complete the transaction.
This information is all what is needed for the software to generates comprehensive reports on the status, purchases, and sales of your securities, providing you with a clear overview of your portfolio.
Items Table with all Investments
The Items Table is directly linked to the Transactions table, allowing it to function as a basic warehouse management system for your investments.
Before entering a transaction for a new stock or bond, you need to create a line of the Investment in the Item table:
- The id which is generally the ISIN of the security.
- The quantity and initial unit price.
- The Account specified in the Account Table
The account is the connection between Financial and Investment Accounting. The sum of the book values all securities sharing the same account should be equal to the balance of the account. - The "Current Quantity" column automatically updates based on the purchases and sales recorded in the Transactions table.
- The "Current Price" field allows you to manually enter the latest market price of each security, enabling an up-to-date view of your portfolio's value.
You can easily paste updated prices from Excel to keep your portfolio values current. - Group different investments together to have a better view and also totals.
Account Table
Within the Accounts Table you define all the necessary accounts that are specific for the portfolio accounting:
- Accounts for investments, that is linked to each investment.
It is in the Assets part of the accounting plan non displayed on the following image. - Earning and Loss on investment sales.
Used when you enter a sales transaction. - Bank charges.
- Currency exchange gain or profit.
Market value of an investment
The market value of an investment is the current price assigned to it in the financial market, and this price can fluctuate based on market conditions. When securities are bought or sold, the portfolio manager informs the securities holder of the exact market price at which each transaction occurred. Unlike book value, which is determined by the accounting process, the market price is readily provided by the market itself and doesn't require the holder to calculate it.
You can specify the market value of the investment in the 'Price Current' column within the Items table. By entering this market price, you can use the valuation report feature to calculate any unrealized gains or losses—the difference between the current market value and the original purchase price of the investment. This provides a snapshot of the potential profit or loss if the securities were sold at the current market price, even though they haven’t been sold yet.
Book Value of an Investment
The book value (or book cost or average cost) of an investment represents the average amount paid to acquire it, which may change over time as additional units are bought or sold. Book value serves as a basis for calculating the gain or loss on a sale, a critical detail for both accounting and tax purposes, as it directly impacts taxable gains.
Calculating book value can often be more complex than finding market value, which is simply the current price of the investment. However, with Banana Accounting, the calculation of book value gain or loss is automated, simplifying this process and ensuring that accurate accounting results are available immediately after a sale.
In the investment account, each transaction related to one or more investments is recorded, and the account balance reflects the book value. This account balance consists of:
- Opening Value: The initial book value at the start of the reporting period.
- Purchase Value: The cost of investments acquired over time.
- Sale Value: The book value of investments that have been sold.
- Profit or Loss on Sales: The difference between the book value and the sale price, recorded at the time of sale.
- Exchange Rate Profit or Loss on Sale: For multi-currency transactions, any gain or loss due to exchange rate fluctuations at the time of sale.
- Market Price Adjustment: Adjustments made to align the book value with the current market price, reflecting unrealized gains or losses.
When preparing a balance sheet, it’s essential to adjust the book value of investments to the current market price. This adjustment ensures that the financial statements accurately reflect the portfolio’s worth, providing insight into unrealized gains or losses—potential profits or losses if the investments were sold at the current market value, even if they haven’t yet been sold.
Accounts and Investments reconciliation
When you insert a new Investment in the Items table you need specify the Account where the value of the investment is booked used the double entry accounting methodology.
Therefore, for all Investments that use the same account, there should be a full correspondence for:
- The opening amount of the account and the opening value of the investments.
- The balance of the account and the book value of all the investments.
The command Reconciliation report will calculate the book value of all accounts and check for the correspondence. If there are any differences it will notify to you.
Balance Sheets & Income Statements
With fully customizable accounting plan and presentation, you can manage any kind of business, financial corporations, foundations, non-profit organization or private fortune. Get instantly Balance sheet, Income statements and all the other double entry reports ready for auditing.
Portfolio reporting
The software makes available multiple reports.
Getting Started
- You can see how it works by using one of our templates.
- Adapt your current accounting in just a few steps.
- Use the extensions to calculate the profit or loss on the sale of securities and obtain various reports.
Documentation
Is there more you need?
The solution is already in use by several customers, but we still consider it in development, as we continue to improve it based on user feedback and requests. Please feel free to reach out if you have any specific questions or requests. Given the time invested in development and the high value it provides to select customers, we may offer it through a specific subscription plan in the future.