In this article
This page outlines the main steps required to set up an Investment Accounting file in Banana Accounting and links to the detailed documentation for each topic.
Download Banana Accounting
You need to install Banana Accounting Plus on your computer.
Investment Accounting is available with Banana Accounting Plus version 10.2.8 or later.
- Download Banana Accounting+ (version 10.2.8 or later).
- Install the Investment Accounting extension using menu Extensions > Manage Extensions .
Before You Start
Investment Accounting combines double-entry accounting with securities accounting to manage investments within a single accounting system.
This page assumes that you are already familiar with concepts such as:
- book value of investments
- valuation methods
- realized and unrealized gains and losses
- exchange rate gains and losses.
If you are new to investment accounting, please refer to the Theoretical Introduction before continuing.
Setting Up the Accounting File
There are two ways to start working with Investment Accounting:
- Adapt an existing accounting file
If you already use Banana Accounting, you can add the Investment Accounting functionality to your existing accounting file by configuring the required accounts, Items and settings. Each investment account represents the accounting value of one or more securities. - Start from a template
You can also create a new accounting file from one of the provided templates. Templates already include the required tables, columns and settings, allowing you to start working immediately.
Available templates:
Setting Up the Exchange Rate Table
The Exchange Rate Table defines the currencies used in the accounting file and stores both opening and current exchange rates.
Before setting up the Accounts table, you need to set up the currencies in the Exchange Rate Table.
- The current exchange rate is used as a default for reevaluation and calculation of exchange rate differences (unrealized exchange rate profit or loss).
- The opening exchange rate is used for converting the opening amount of an account or the opening value of investments.
Setting Up the Accounts Table
Set up the chart of accounts and its structure (see Account table).
- Adapt the accounting plan to your needs by modifying, adding or removing accounts and groups.
- Add the Investment asset accounts that will be used for the securities.
- For the balance sheet account with an opening amount you have to specify the opening amount in the account currency.
- Managing Crypto-Currencies
Crypto-currencies like Bitcoin, Ether, can be managed as normal currencies. The main difference is that they use 6, 18 or more decimal places.
Templates are usually available with 2 decimal places, but you can easily convert the accounting to use more decimal place for the foreign currencies.- Menu Tools > Convert to a new file.
Setting Up the Items Table
Each security (share, bond, fund, ETF, etc.) is represented by an Item. In the Items Table you set up the list of securities (see Items table).
- Create an entry (a row with an ItemId) for each security.
- Each Item must be linked to an Asset Account.
- The currency of the Item and the Asset Account must be the same.
- The sum of the opening value of all items with the same asset account should equal the opening amount of the asset account.
- The sum of the current value of all items with the same asset account should equal the current balance of the asset account.
- Specify the opening quantity and the opening price.
- The opening quantity and price should be the same as the current quantity and price in the file of the previous year.
- Specify also the Asset Type (1 Shares, 2 Bonds)
- The current quantity is calculated by the program by adding the opening quantity to the quantities of all transactions for the corresponding Item (ItemId).
- You need to enter manually the current price of the Investment.
- You can also use the command Import Market Prices.
Enter or import transactions
Transactions record both the accounting information and the investment-specific information.
In the Transactions table you enter the transactions.
- Enter normal accounting transactions (debit credit)
- You can enter manually.
- You can import from a bank statement.
- Complete the Investment transactions
For transactions involving securities, you need to enter additional investment information.- At least enter the ItemId.
- For purchase and sales also enter the Quantity.
- When entering the quantity and there is already an amount the program automatically calculate the unit price.
- Make sure that the Balance sheet account is the same as the Asset account defined for the Investment.
- If you want to separate commissions, banks cost, interest, etc, you need to split the transactions on multiple lines.
- For each element you should create a separate line.
- When selling securities you also need to calculate the realized profit or loss for on investments and exchange rate.
- Use the command Calculate sales data to let the program automatically create the supplementary transactions.
End of year reevaluation
Year-end valuation updates the accounting value of investments to their market value by generating unrealized gain or loss transactions.
At the end of the year, or whenever you want to prepare financial statements based on market values, you need to recognize unrealized gains and losses.
- In the Exchange Rate table update the current exchange rate with the one you will use for end of period.
- In the Items table enter in the Current price column the market value of the investment.
- Use the command Create Adjustment Transactions.
- The program will automatically create the transactions that will adjust the value and book the unrealized Profit or Loss.
- The quantity column will have a neutral number (±123.00), so that the quantity will be used to create the transaction amount, but will not change the current quantity of the items.
- For the exchange rate use the command Create Exchange rate differences.
End of year operations and checks
Prior to printing the final Balance sheet you you make all the end of year adjustments and checks. See: