Investment Accounting Opening and Closing the Year

Beginning of the year

At the beginning of a new accounting year, make sure that the opening quantities and values of the investments in the Items table are consistent with the opening balances of the corresponding Investment Balance Sheet Accounts.

When a new accounting year is created from the previous year, Banana Accounting automatically carries forward the relevant investment quantities, prices, and account balances.

If you need to add a new security manually, enter its opening information in the Items table and make sure that its opening value is consistent with the opening balance of the Investment Balance Sheet Account specified in the Asset Account column.

Add a new security

To manually add a new security at the beginning of the accounting year, define it in the Items table and enter its opening values:

• Begin Qt. – Enter the opening quantity of the security. For bonds, enter the opening nominal value.
• Price Begin – Enter the opening unit price of the security.

Banana Investment Accounting automatically calculates the Value Begin based on the values entered in Begin Qt. and Price Begin.

In multi-currency accounting, the corresponding opening value in the base currency is also calculated automatically.

Matching Securities Balances with the Investment Balance Sheet Account

The total opening value of the securities must correspond to the opening balance of the Investment Balance Sheet Account specified in the Asset Account column of the Items table.

If multiple Items are assigned to the same Investment Balance Sheet Account, the sum of their Value Begin amounts must equal the opening balance of that account.

For example, if two shares are assigned to the same Shares CHF account, the sum of their opening values in the Items table must correspond to the opening balance of the Shares CHF account in the Accounts table.

This correspondence keeps the investment values in the Items table and the related balances in Financial Accounting aligned.

The following image shows that the opening values in the Items table correspond to the opening balance of the related Investment Balance Sheet Account in the Accounts table.

Opening Exchange Rate

In multi-currency accounting, Banana Investment Accounting automatically calculates the opening value of each security in the base currency using the applicable opening exchange rate.

The same opening exchange rate is used to calculate the opening balance of the corresponding Investment Balance Sheet Account, allowing the opening values of the securities and the account balance to remain consistent in the base currency.

To ensure this consistency, the opening balance of the Investment Balance Sheet Account in the account currency must be entered in the Opening Currency column of the Accounts table. 

For more information about the values calculated in the Items table, see Data calculated automatically.

Check initial balances

After entering the opening values, you can verify that the opening values of the securities correspond to the opening balances of the related Investment Balance Sheet Accounts:

• Use the Actions > Check Accounting command. Select the Items and Asset accounts opening balances options.

• Use the Check balances extension to verify that the total opening value of the securities corresponds to the opening balance of the associated Investment Balance Sheet Account.

End of the Year

At the end of the accounting year, enter in the Price Current column of the Items table the price at which you want to value the security, normally its year-end market price.

Banana Investment Accounting automatically calculates the current value based on:

Current Qt. × Price Current = Value Current

The Current Qt. is automatically updated based on the investment transactions recorded during the year.

The resulting Value Current represents the current value of the security at the price entered in Price Current.

Closing Exchange Rate

In multi-currency accounting, Banana Investment Accounting automatically calculates the current value of each security in the base currency using the applicable current exchange rate.

The same current exchange rate is used for the corresponding Investment Balance Sheet Account, helping to keep the current values of the securities and the related account balance consistent in the base currency.

This consistency is particularly important when comparing the Value Current of the Items with the balance of the corresponding Investment Balance Sheet Account and when creating year-end adjustment transactions.

Create Adjustment Transactions

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

You can use the Create adjustment transactions extension to automatically calculate and create the required adjustment transactions.

The extension currently records the adjustment directly in the Investment Balance Sheet Account specified in the Asset Account column of the Items table. After the adjustment transactions have been created, the balance of the Investment Balance Sheet Account should correspond to the total Value Current of the Items assigned to that account.

To verify the balances, compare:

• the current balance of the Investment Balance Sheet Account in the accounting records
• the Value Current of the related Items in the Items table.

If multiple Items are assigned to the same Investment Balance Sheet Account, its balance should correspond to the sum of the Value Current amounts of all Items assigned to it.

In this example, the corresponding values in the Items table confirm that the Item values are consistent with the balance of the related Investment Balance Sheet Account.

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 Investment Balance Sheet Account specified in the Asset Account column.

In this case, you can:

• manually record the adjustment transactions
• modify the account used in the transactions generated by the Create adjustment transactions extension.

When using this approach, Price Current in the Items table should no longer represent the market price of the security. Instead, it should reflect the price corresponding to the current book value.

This ensures that the Value Current of the Item remains consistent with the balance of the corresponding Investment Balance Sheet Account when the valuation adjustment is recorded separately.

Creating a New Accounting Year

When you create a new accounting year using the Create New Year command, Banana Accounting automatically carries forward the closing values required for the new accounting year.

For each Item:

• the closing Current Qt. becomes the Begin Qt. of the new year
• the closing Price Current becomes the Price Begin of the new year.

The closing balances of the Investment Balance Sheet Accounts are also carried forward as opening balances for the new accounting year.

The opening Value Begin amounts of the Items and the opening balances of their corresponding Investment Balance Sheet Accounts should therefore remain consistent.

After creating the new year, use the Check balances extension to verify that the total opening value of the Items corresponds to the opening balance of the associated Investment Balance Sheet Account.