Investment Accounting Opening and Closing the Year

Beginning of the year

At the start of a new accounting year, it is essential to ensure that the opening balances of securities and related account are correctly set. If you are continuing from a previous year, the program will automatically carry over key values such as quantities, prices, and account balances. However, if you need to add new securities, you must manually enter their initial values and ensure that the total matches the related account balances.

Add a new security

To manually add a new security at the beginning of the year in your accounting, you need to enter its initial values in the Items table.

• Initial Quantity: Enter the initial quantity of the security in the Begin Qt. (QuantityBegin) column.
• Initial Price: Enter the initial unit price of the security in the Price Begin (UnitPriceBegin) column.

The beginning value of the security (and its value in the base currency if using multi-currency accounting) is automatically calculated based on these values.

Matching Securities Balances with the Asset Account

The initial value of the securities must always match the initial balance of the Asset account to which they are assigned.

The program assumes that if securities are defined in the Items table with an opening value (opening balance), the opening balance of the corresponding Asset account must have the same amount.

If multiple securities use the same Asset account, the sum of the opening values of all securities must equal the opening balance of that account.

The following image shows an example with two shares that both use the Shares CHF account. In this case, the sum of their values must match the opening balance of the Shares CHF account.

You can see in the following image of the Account table that the begin amounts in the Items table correctly match with the opening balance of the account.

Opening Exchange Rate

In the Items table, the program automatically calculates the exchange rate applied to the opening value of the securities using the same opening exchange rate applied to the Asset accounts in the Chart of Accounts for the opening balance.

To ensure consistency, the opening balance of the account in the account currency must be defined in the Accounts table in the Opening currency column.

This allows the program to calculate the opening value in base currency using the same conversion logic applied to each security in the Items table.

With this setup, the opening balances of the securities and the Asset accounts remain aligned.

If the opening balance of the Asset accounts is recorded in the Transactions table using a different exchange rate, differences will most likely occur between the base currency balances of the Asset accounts and the related securities.

Check initial balances

Once you set up the amounts, you have the possibility to check if the your inital balances are all correct:

• Using the command: Action → Check Accounting. By selecting the options “Items” and “Asset accounts opening balances”, the program checks the opening balances and display a warning message if it finds any inconsistencies.

• Using the Check balances extension: Verify that the total opening value of the securities matches the opening balance of the associated account. In the example in the image below, everything match so we have no differences.

End of the Year

In the Items table, column Price Current, enter the price at which you want to value the security at year-end (usually the market price). The program automatically calculates the current value of the security by multiplying the entered price by the remaining quantity, which is updated automatically based on the recorded transactions.

This calculated amount represents the current value of the security at the selected market price.

Closing Exchange Rate

As with the opening value, the program automatically calculates the exchange rate applied to the current value of the securities in the Items table.

The exchange rate used for the calculation is the same exchange rate applied to the corresponding Asset accounts in the Accounts table for the current balance. This ensures that the value of the securities and the balance of the Asset accounts remain consistent in the base currency, which is particularly important when create year-end adjustments transactions

Create Adjustment Transactions

Before closing the accounting year, make sure that all necessary valuation adjustments have been recorded.

You can use the Create adjustment transactions extension, which automatically calculates and records the required adjustments in the accounting records.

The extension currently records the adjustment amount directly in the Asset account. After the adjustment transactions have been created, the balance of the Asset account should be equal to the current value of the security shown in the Items table in the Current value column.

To verify the accuracy of the balances, use the Check Balances extension to ensure that:

• The total current value of the securities matches the balance of the associated Asset account.
• The UnitPriceCurrent reflects the correct adjusted price before transitioning to the new accounting year.

Recording the adjustment using a different account

If required for auditing or reporting purposes, you may prefer to record the unrealized gain or loss in a separate balance sheet account instead of directly adjusting the Asset account.

In this case you can:

• Manually record the adjustment transactions.
• Modify the account used in the transactions generated by the extension.

However, when using this approach, the value entered in the Items table should no longer be the market price of the security. Instead, it should reflect the current book value.

Otherwise, the balance of the security and the balance of the Asset account will no longer match, because the value of the security would include the adjustment amount while the Asset account balance would not.

Creation of a new year

When you create a new year using the create a new year command, the program automatically carries over the current values of each security:

• Current Quantity: The QuantityCurrent column is automatically updated based on transactions throughout the year.
• Current Price: Enter the closing price of the security in the UnitPriceCurrent column.

In the new accounting year, these values automatically become the opening values, appearing in the Initial Quantity and Initial Price columns in the Items table. 

The program also automatically retrieves the account balance from the previous year and sets it as the opening balance for the current year. For more details, see Update Opening Balances.

To ensure consistency, use the Check balances extension to verify that the total opening value of the securities matches the opening balance of the associated account.