Accounting question

[OxygeN]

Hi.
I hope somebody can give some indications on how to account for some transactions. Let's start with the first one:

I have a sum on my account called "UBS investments", which is the result of the opening balance (01.01.2024 - when I started to use the accounting software) plus 8 monthly additions (I was doing DCA). Now last month I decided to close all my positions at UBS and move them over to IBKR. The process of course involved selling every position at UBS and the cash was then put on my checking account. The amount I retrieved was greater than the balance of my "UBS investments" account in my accounting software. So the first practical question is: how do I update the balance to reflect the one on the date the positions were closed? I think I have to add a transaction into the "UBS investments" account which increases the balance up to the final value (when selling). But as in double-entry accounting every transaction involves at least 2 different accounts, I now don't know where I would take the money from. Do you think it would be correct to take this money from an "Income:Investments income" account?

Thanks!

 

[Baptiste Wicht]

Hi,

This is probably showing the limits of double-entry accounting for such operations.
The only way I see of doing it is adding a "capital gains" account and then using when you sell so that you can reflect the actual balance. And this will also let you track your capital gains.

 

[OxygeN]

Hi Baptiste and sorry for my late reply. I had to think this through many times and I did it as follows.
My account "UBS investments" has an initial position called "opening balance" which has my invested capital on 31.12.2023 (120k). This balance is accounted for in the account "Equity:Opening Balances".
I then added the monthly investments of CHF 500.- each until I stopped.
The balance would be CHF 124500.
I then closed all positions at the beginning of September 2024 and I got CHF 150k (rounded for calculation's sake).
This amount was of course withdrawn from "UBS investments" account and first went to my "checking account" - but this was leaving me with minus CHF 25500.- which is wrong (closing an account should leave it at ZERO).
Therefore I added a final transaction called "UBS interests" and I accounted it on "Income:Interest Income:Investment Interest".

What do you think of the above? To me it sounds fine, but maybe I missed something?
Thanks.

 

[Baptiste Wicht]

Therefore I added a final transaction called "UBS interests" and I accounted it on "Income:Interest Income:Investment Interest".

What do you think of the above? To me it sounds fine, but maybe I missed something?

I think it's entirely reasonable. I would not call it interest, but capital gains, but other than that detail, it makes sense. If you ever sell ETF later, you can do the same and this will help "close" the accounts.