2023-02-26 GnuCash IRC logs
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17:11:54 <potatosal> reinvested dividends should transfer to the brokerage account or an income account? I don't know about income, are they considered income even tho they're already invested? they're unrealized gains here, right?
17:15:14 <jralls> potatosal, No, reinvested dividends are two transactions rolled into one. First there's paying you a cash dividend, dr broker cash account, cr income, then a buy dr stock, cr broker cash. You can leave out the two broker cash splits if you really want. Probably best not to unless you have trading accounts enabled.
17:17:19 <potatosal> jralls: what do you mean by trading accounts enabled?
17:18:21 <jralls> File>Properties, Enable Trading Accounts on the first tab. http://wiki.gnucash.org/wiki/Trading_Accounts
17:21:50 <potatosal> oh, I don't use that
17:25:53 <potatosal> I don't understand its usefulness, it says "their benefit is to avoid imbalances caused by trading commodites" - what imbalances?
17:27:55 <potatosal> if I want to avoid splitting it, I just transfer to the brokerage account? withint the stock ie
17:31:06 <jralls> potatosal, book imbalances, not transaction ones, generally caused by failing to account for trading gains and losses. But turning them on also changes the behavior of the register in a way that makes multi-commodity transactions clearer.
17:32:49 <potatosal> I see
17:33:43 <potatosal> jralls: I think this is helpfull for short term trading
17:33:45 <jralls> If you want to do it in two splits you'll dr the stock account and cr the income account. In the transfer dialog exchange rate use the actual number of shares/units and let GnuCash calculate the price to avoid rounding issues.
17:35:33 <jralls> It's helpful regardless of the holding period, but especially for currencies where you don't usually get a statement reminding you to enter the gain/loss.
17:35:51 <potatosal> dr/cr ? is it debit/credit?
17:36:02 <jralls> Yes.
17:36:30 <potatosal> confused as where the 'r' came from for debit (dr) lol
17:36:45 <jralls> Probably Italian. ;-)
17:38:00 <potatosal> :D
17:38:25 <jralls> Or Latin. The method was popularized in Europe by a 15th-century Florentine and writing in Latin was still common then.
17:38:49 <NoobAlice> From Wikipedia "It is sometimes said that, in its original Latin, Pacioli's Summa used the Latin words debere (to owe) and credere (to entrust) to describe the two sides of a closed accounting transaction." https://en.wikipedia.org/wiki/Debits_and_credits
17:39:08 <potatosal> jralls: what if, within the stock account, I transfer the dividend to the brokerage account? is that wrong?
17:39:43 <NoobAlice> ... but then presents other theories.
17:39:51 <jralls> That would be the four-split version.
17:40:04 <potatosal> the only latin I know is the "Lorem ipsum dolor sit amet..." :P\
17:40:54 <jralls> I had Latin for three years in junior high school. I remember darn little beyond Omnia gallia in tres pars divisa est.
17:40:58 <potatosal> jralls: how is that a split? i'm confused
17:41:31 <jralls> Um, do you not understand the term "split" in GnuCash? Have you read the Tutorial and Concepts Guide?
17:42:02 <potatosal> jralls: isn't it when you dr/cr several accounts in a single transaction?
17:42:48 <jralls> Sometimes, but not this time. Each transaction is composed of two or more splits, with each split containing the entry for a particular account.
17:43:12 <jralls> Pick a transaction and click the split button in the tool bar.
17:43:59 <potatosal> yeah, I use that in some transactions
17:44:29 <potatosal> jralls: the way i described it earlier, it only uses two accounts where you said it's a four-split
17:45:45 <jralls> No, if you include the broker cash account it has to have three accounts, and the broker cash account gets two splits, one dr from income and the other cr to the stock.
17:47:09 <jralls> If you just dr stock and cr cash then you reduce your cash balance, which isn't the case.
17:50:20 <potatosal> I must be doing something wrong then lol - I'm only dealing with a broker account and stock account. I'm not transferring anything to income
18:00:25 <potatosal> jralls: also, something weird is happening. When I enter a share price like 95.77, gnucash goes into fractions, why is that? e.g. https://ibb.co/zZRdsrb - why not just use decimal?
18:01:22 <potatosal> the stock account's "Smallest fraction" is "Use Commodity Value"
18:01:42 <potatosal> which I think is for the shares, not price
18:18:57 <jralls> It is indeed for the shares. And for currency it's generally either 1/1 (e.g. JPY) or 1/100 (almost everyone else). The price is a fraction because prices are rounded only if they can't be represented by an 18-digit number divided by another 18-digit number. From the first line in your screenshot, 1000.03/10.442 is 95.7699674391879, not 95.77. That's more than 9 decimals so it gets presented to you as a fraction. You can force it to always displ
18:18:58 <jralls> ay a rounded decimal price with Preferences>Numbers>Force prices to display as decimals.
18:20:43 <jralls> As for using only a brokerage account and a stock account, you are indeed doing something wrong. Go study the Tutorial and Concept Guide and maybe get a basic accounting text and study that too.
19:18:52 <potatosal> jralls: here https://www.gnucash.org/docs/v4/C/gnucash-guide/invest-dividends1.html - the DRIP part is transferring to income only, shouldn't there be another one where dr income and cr stock?
19:20:24 <jralls> No. That would reverse the transaction.
19:23:47 <jralls> Note that DRIPs are a special case where you must own the stock as an entry at the custodian bank (State Street or JPMorgan in nearly all cases), not in street name at a broker. The company must have a DRIP program in which you must be enrolled. In that case the dividend really is in stock, no cash involved, and no broker or broker account either.
19:24:30 <potatosal> ok, then this isn't helpful
19:27:00 <jralls> That said, that transaction is structured the same way as the two-split method I outlined earlier. You can do it that way if you don't want to reflect that money went to your brokerage account and they bought more stock on your behalf.
19:29:04 <potatosal> yes, that would work, transferring to income within the stock
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