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This page outlines the main steps required to set up Investment Accounting in Banana Accounting and links to the detailed documentation for each topic.
You can start from a ready-to-use Investment Accounting template or add the Investment Accounting functionality to an existing double-entry accounting file.
Before You Start
Investment Accounting combines double-entry accounting with investment management, allowing you to manage investments within the same accounting system.
This page assumes that you are already familiar with concepts such as:
- Book Value and Market Value
- valuation methods
- realized and unrealized gains and losses
- exchange rate gains and losses.
If you are new to Investment Accounting, refer to the Theoretical Introduction before continuing.
Note: If you currently use an Income & Expenses accounting file, convert it to a Double-entry Accounting file 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 tables, columns, accounts, Items, and settings. - Start from a template
You can create a new accounting file from one of the provided templates. Templates already include the required tables, columns, accounts, and settings.
For more information, see the following Templates:- Double-entry accounting with Investment Accounting – for managing investments in a single accounting currency.
- Multi-currency double-entry accounting with Investment Accounting – for managing investments in multiple currencies.
- Multi-Currency Investment Accounting in a Separate File
If you prefer to keep your investment accounting separate from your general accounting, you can manage investments in a dedicated Banana Accounting file.
The templates also provide examples of Asset Accounts, Items, realized and unrealized gain and loss accounts, and investment transactions.
Even if you intend to adapt an existing accounting file, reviewing one of the templates can help you understand the recommended structure.
Add the Items Table and Investment Columns
If your accounting file was not originally created for Investment Accounting, enable the required tables and columns.
Complete the following steps:
- Add the Items table and the investment-specific columns to the Transactions table.
- Make sure that the ItemId column is visible in the Transactions table. Use Data > Display Columns and enable the ItemId column if necessary.
- Install the Investment Accounting extension using Extensions > Manage Extensions.
Change the Decimal Precision for Unit Price
Some investments require Unit Prices with more decimal places.
If necessary, increase the Unit Price decimal precision using:
Tools > Add/Remove functionalities > Change Unit Price Decimal Places
This can be useful for investments whose prices require greater decimal precision.
Setting Up the Exchange Rate Table
If you use Multi-currency Accounting, define the currencies and exchange rates in the Exchange Rate Table.
The Exchange Rate table stores both opening and current exchange rates:
- the opening exchange rate is used to convert opening account balances and opening investment values into the base currency;
- the current exchange rate is used for current valuations and exchange rate calculations.
For foreign-currency investments, set up the required currencies before entering opening values for the related accounts and Items.
Setting Up the Accounts Table
Review your chart of accounts and add the accounts required for Investment Accounting. See Accounts.
In particular:
- add the Investment Balance Sheet Accounts that will hold the Book Value of your investments;
- add any income and expense accounts required for investment transactions, such as:
- realized gains and losses;
- unrealized gains and losses;
- commissions, bank fees, and broker expenses;
- dividends;
- interest;
- exchange rate gains and losses, when applicable;
- enter the opening balance for each Investment Balance Sheet Account.
You may use separate Investment Balance Sheet Accounts for different investment categories or currencies, for example shares, bonds, or funds.
Setting Up the Items Table
Each investment, such as a share, bond, fund, or ETF, is represented by an Item.
In the Items table:
- create one Item for each investment;
- assign a unique ItemId;
- link each Item to its Investment Balance Sheet Account using the Asset Account field;
- specify the investment currency;
- specify the Asset Type:
- 1 – investments measured by effective quantity, such as shares, ETFs, and funds;
- 2 – investments measured by nominal value, such as bonds;
- enter the opening Quantity and Price Begin, when applicable.
The Item and its Asset Account must use the same currency.
If you are continuing from a previous accounting year, the opening Quantity and Price Begin should correspond to the closing Quantity and Price Current carried forward from the previous year.
Opening Value Reconciliation
The opening values of the Items must be consistent with the opening balances of their Investment Balance Sheet Accounts.
For each Investment Balance Sheet Account:
Opening balance of the account = sum of the Value Begin amounts of the Items linked to that account
Banana calculates the Current Quantity from the opening Quantity and the Quantity changes recorded in Transactions for the corresponding Item.
The current balance of each Investment Balance Sheet Account must remain reconciled with the Book Values of the Items linked to that account.
Enter or Import Transactions
The Transactions table combines double-entry accounting information with investment-specific information.
Transactions can be entered manually or imported, for example from a bank statement.
For transactions involving investments:
- enter the ItemId;
- for purchases and sales, enter the Quantity;
- enter or verify the Unit Price;
- make sure that the Investment Balance Sheet Account used in the transaction corresponds to the Asset Account assigned to the Item.
When Quantity and Amount are entered, Banana can calculate the corresponding Unit Price.
Investment purchases and sales are generally recorded as compound transactions. Separate rows may be used for:
- the investment movement;
- the bank payment or receipt;
- commissions, bank fees, or other transaction costs;
- interest or other income;
- realized gain or loss on the investment;
- realized exchange rate gain or loss, when applicable.
For sales, use Calculate Sale Data to calculate the values required to complete the sale transaction.
Update Market Prices
Enter the current Market Price of each investment in the Price Current column of the Items table.
You can enter prices manually or use the Update Market Prices command.
Banana calculates:
Market Value = Current Quantity × Market Price
Updating the Market Price allows you to determine the Market Value and the unrealized gain or loss without changing the Book Value of the investment.
Create Market Value Adjustments
When required by the applicable accounting treatment, you can adjust the Book Value of investments to their Market Value.
Before creating the adjustment:
- update the current exchange rates, when applicable;
- update the Price Current of the investments.
Then use Create Adjustment Transactions.
The extension calculates the difference between the current Book Value and the Market Value and creates the required unrealized gain or loss transactions.
The adjustment changes the Book Value without changing the Quantity held. A neutral or zero Quantity is used as applicable.
For exchange rate differences, use Create Exchange Rate Differences when required.
End-of-Year Operations and Checks
At the end of the accounting year, complete the required valuation and exchange rate adjustments and verify that the balance of each Investment Balance Sheet Account corresponds to the sum of the Book Values of the Items linked to that account.
For the complete year-end procedure, see: