Booking share movements

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 sales Data extension that automatically calculates this value for you. On the same row, the extension records the sale quantity as a neutral number. This allows it to also determine the unit result of the sale, showing the gain or loss per individual security.
   • 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.