Transactions of purchase and sale of securities

In the Table Transactions you enter all the relevant transactions relevant for accounting including also the information necessary for the Portfolio accounting.

• Item code for the security, as specified in the Item (ISIN number)
  If the transaction is split on different rows you always need to enter the Item code
• Quantity and price
• Split the bank costs
• Profit or Loss of the sale of security

For each entry, it is necessary to indicate in the Item column the security you are referring to by entering its id (ISIN number), this operation firstly allows you to immediately see if it is a record concerning the portfolio but also is necessary as a reference when creating the report.

It is also useful to indicate in the Doc column the number of the transactions, as shown in the examples below.

Operations on Shares

The transactions of buying and selling shares are structured in such a way that show each transaction in detail, making it clearer to understand the whole process, and to show clearly how the book value of the securities change.

Purchase of shares

The purchase of a share should be divided into three different rows of registration, as in the example shown below.

1. Purchase of shares
   • In the Debit column enter the account of the security
   • Enter the quantity of shares purchased and the unit price, the amount is calculated automatically
2. Bank charges
   • The debit column indicates the account to record the bank charges due to the processing of the purchase, which corresponds to the amount due to the bank
3. Payment of securities and charges
   • Sum of the amount due for the purchase of securities and bank charges. Payment can be made by bank, cash or other means. The account is entered as an account receivable

Sale of shares

As the example image shows, the sale of a share requires a few more lines of recording than the purchase, because when a share is sold it is necessary to record the result of the sale, which can be a profit or a loss depending on the market price of that share compared to its book value at the time of the sale.

1. Sale of shares
   • In the Credit column indicate the account of the security you are selling, enter the total amount at which the security was sold (without bank charges). This operation allows you to update the accounting value of the security using the actual sale value
   • Enter the quantity of securities sold and indicate at what price they were sold. The selling price corresponds to the market value, so the cost of the security on the market at that moment
2. Bank charges
   • The Debit column still records bank charges, like in the purchase
   • This amount summed to the "Amount Net cashed from the bank" (3) is equal to the "Sale of shares" amount (1)
3. Amount Net cashed from the bank
   • In the debit column enter the account where the proceeds from the sale of the security are to be cashed. This is usually the amount communicated by the bank, after deduction of the charges.
   • If the security is not in the base currency, remember to use an account that uses the same currency as the security.
4. Result on sale
   • As indicated at the beginning of the paragraph, the result on sale is calculated on the difference between the book value and the market value at which the shares are sold.
   •  Use the Calculate book profit/loss on sale extension that automatically calculates these values for you.
   • Record a profit on the sale by entering a revenue account on the credit side, or conversely a loss on the sale by entering a cost account on the debit side and indicate the amount.
5. Exchange rate profit or loss (only in multi-currency accounts)
   • The exchange difference is calculated by comparing the accounting exchange rate with the current exchange rate.
   • The accounting exchange rate is already calculated automatically by the extension, otherwise you can find it by opening the security account tab and comparing the balance in the security's currency with the balance in the base currency.
   • In the Debit column in the case of an exchange rate profit enter the security account, in the case of a loss enter a cost account for the exchange rate loss.
   • In the Credit column, in the case of an exchange rate profit, enter a revenue account for the exchange rate profit, in the case of a loss enter the security account in order to decrease its values.

If it is a multi-currency account also enter the currency and the exchange rate for each row. Make sure that the currency entered corresponds to the currency indicated for the security account.

Operations on Bonds

The transactions for bond trades introduce some new concepts as the nominal value or interest, this is because it is a different type of asset, but as for the Shares the focus of the transactions structure is on the accounting value of the asset.

Purchase of Bonds

1. Purchase of Bonds
   • In the Debit column enter the account of the bond.
   • In the quantity column enter the nominal value of the bond, and in the unit price enter the current price of the bond. The resulting amount is the purchase value of the bond.
2. Bank charges
   • The debit column indicates the account to record the bank charges due to the processing of the purchase, and indicates the amount due to the bank.
3. Pro-rata Interests
   • Since some time has certainly gone since the maturity of the last coupon, the interest accrued since the last maturity must be paid at the time of purchase. This leads to a decrease in the securities income account.
   • It is useful to indicate in the description the period taken into account for the payment of interest as well as the interest rate.
4. Payment of Bonds
   • The sum of the purchase, bank charges and the interests, which can be paid for example with the bank account.

Collection of interest coupons

This operation normally takes place once or twice a year (the dates on which the coupons fall due are indicated on the coupons). At each maturity date, the full amount of interest accrued during the period indicated on the coupon must be recorded.

1. Net interest
   • The net amount collected, through a bank for example. The value is net of withholding tax. Record the income in the debit column.
2. Recovery of Withholding Tax
   • Amount due as withholding tax, in Switzerland it represents 35% of the interest earned.
   • It is useful to use a special account to record the value of this amount, as usual the amount is repaid in full or at least in part it is accounted for as a credit increase.
3. Total Interest
   • Total gross interest, to be accounted for as securities income.

Sale Of Bonds

1. Total Sale
   • In the Credit column enter the account of the security you are selling.
   • In the quantity column, enter the nominal value of the bond you are selling, putting a minus before the amount.
   • Enter the current rate of the bond.
   • This operation allows you to update the book value of your bonds by accounting for the total effective value of the security.
2. Bank Charges
   • The Debit column still records bank charges, as during the purchase.
3. Accrued Interest
   • In the Credit column indicate the income from securities.
   • The interest accrued from the payment of the last coupon to the current date of sale is calculated. The seller of the bond is entitled to receive interests for that period.
4. Cashed Net
   • In Debit column enter the collection of the net amount.
   • The net value received is found by subtracting bank charges from the total value and adding accrued interest.
5. Result on Sale
   • The result of the sale is calculated by subtracting the value of the bond at the current price with the value the bonds had at the time of purchase. The price is always applied to the nominal value.
   • If there is a gain on the sale, enter the security account in debit and a securities income account in credit. If a loss occurs, enter a loss on sale account in debit and a security account in credit.
6. Exchange rate profit or loss (only in multi-currency accounts)
   • The exchange difference is calculated by comparing the accounting exchange rate with the current exchange rate.
   • The accounting exchange rate is already calculated automatically by the extension, otherwise you can find it by opening the security account tab and comparing the balance in the security's currency with the balance in the base currency.
   • In the Debit column in the case of an exchange rate profit enter the security account, in the case of a loss enter a cost account for the exchange rate loss.
   • In the Credit column, in the case of an exchange rate profit, enter a revenue account for the exchange rate profit, in the case of a loss enter the security account in order to decrease its value.

Withholding Tax (35%)

Withholding tax in Switzerland is a levy on capital gains, lottery winnings, life annuities, pensions and insurance benefits.

Nominal Value

Is the portion of the debt shown on the bond on which interest is calculated.

Interests

It is expressed as a percentage and represents the amount of interest that the coupon holder receives at regular intervals, usually annually. Interest is always calculated on the basis of the Nominal value.

Adjustment to the market price

This entry is normally made at the time of closing the securities account and allows for the recording of (presumed) gains or losses on securities still held. The value of the securities at average cost is assessed against the value of the securities at market price and the profit or loss is recorded using the securities account and a securities income or expense account respectively.