Accounts table

In the Accounts table, in addition to the various accounts necessary for the financial accounting, it is necessary to define some specific accounts to keep track of securities.

To maintain an effective Investment Accounting system, various accounts must be set up and organized in the Accounts Table. 
These accounts are grouped into three main categories, each serving a distinct purpose:

Balance Sheet Investments accounts 

Represent the value of investments at their book value and summarize the total value of all investments.

• You need at least one asset account where to register the purchase and sell of the securities.
• If you have different securities types, like share, bonds, etc, we advise you to create a specific account for each type.
• If you are using a multi-currency account you need at least an account for each currency.
• If you manage also bonds it is useful to have a credit account to hold the Withholding tax.
• Key Characteristics:
  • Balance Accounts are directly linked to specific investments (Items).
  • The currency of the Balance Account must match the currency of the Item ID.
  • In transactions, Balance Accounts are always used in conjunction with a specific Item ID.
• Types of Balance Accounts:
  • Investment Accounts: Track investments such as stocks or bonds.
  • Asset Accounts: Represent ownership of assets, such as real estate or equipment.
  • Liability Accounts: Represent obligations, such as loans secured by investments.

Value-Changing Contra Accounts

• Purpose: Record changes in the value of investments, such as gains, losses, and other adjustments. 
  These accounts are always paired with a Balance Account and require an Item ID in transactions.
• Types of Value-Changing Contra Accounts:
  • Realized Gains and Losses (recorded when investments are sold):
    • Realized Gain on Investments: When the selling price exceeds the book value, the gain is calculated as: 
      (Selling Price−Book Price)×Quantity Sold
    • Realized Loss on Investments: When the selling price is below the book value, the loss is calculated similarly.
    • Realized Exchange Rate Gain: When the base currency value of the investment increases due to exchange rate changes during the sale.
    • Realized Exchange Rate Loss: When the base currency value decreases due to exchange rate changes during the sale.
  • Depreciation: Tracks the decrease in value for assets over time.
  • Other Value-Changing Accounts:
    • Costs: Expenses related to investments.
    • Income: Earnings unrelated to direct transactions (e.g., rebates or adjustments).
    • Rounding Differences: Adjustments for rounding errors in calculations.
  • Unrealized Gains and Losses (revaluation to market price or exchange rates, typically at year-end):
    • Unrealized Gain on Investments: The difference between the book value and the market value when the market value is higher.
    • Unrealized Loss on Investments: The difference when the market value is lower than the book value.
    • Unrealized Exchange Rate Gain: Adjustments in the base currency due to exchange rate fluctuations at year-end.
    • Unrealized Exchange Rate Loss: Adjustments in the base currency due to exchange rate fluctuations at year-end.

Profit & Loss Accounts

• Purpose: Record income and expenses associated with investments, such as dividends, interest, or fees. These accounts do not have a direct link to a Balance Account but are associated with an Item ID in transactions.
• Common Profit & Loss Accounts:
  • Interest Earned: Income from interest-bearing investments.
  • Interest Paid: Expenses from borrowing or margin accounts.
  • Dividend Income: Earnings from stock dividends.
  • Commissions Cost: Fees paid for investment transactions.
  • Charges: Miscellaneous charges related to investments.
  • Other Income: Any other investment-related income.
  • Other Costs: Any additional costs incurred.