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How do I adjust investment account loss or gain

Posted: Mon Jul 27, 2020 10:41 am
by philwells1
Our church has an investment account which is a fund account in our Power Church program. We receive quarterly statements for the account. It is handled by the Diocese and as all investment accounts it fluctuates up or down according to the market. I am at a loss as to how to adjust the quarterly balance on the fund account. We have no method such as investment gain or loss. Your advice would be appreciated.

Re: How do I adjust investment account loss or gain

Posted: Mon Jul 27, 2020 2:37 pm
by NeilZ
philwells1 wrote:
Mon Jul 27, 2020 10:41 am
Our church has an investment account which is a fund account in our Power Church program. We receive quarterly statements for the account. It is handled by the Diocese and as all investment accounts it fluctuates up or down according to the market. I am at a loss as to how to adjust the quarterly balance on the fund account. We have no method such as investment gain or loss. Your advice would be appreciated.
Here is what I replied to a similar question from a year or so ago. Please note that we also keep our investments in a investement accounting fund to keep it seperate from the operations account:
In the CoA, I have setup EF-1330-000 Mutual Fund, and EF-1335-000 Mutual Fund Gain/Loss. I also added a new Fund Balance/Net Assets account EF-3115-000 Unrealized Gains/Losses .

When I receive the mutual fund statement, I use the following transaction for Unrealized GAINS:

EF-1335-000 DB 1000.00
EF-3115-000 CR 1000.00

This correctly reflects the unrealized gains, and is properly shown on the Balance Sheet, not on the I&E report.

If there's a loss, and I fully expect one this quarter, I would enter the following for the LOSS

EF-1335-000 CR 1000.00
EF-3115-000 DB 1000.00

I hope this helps.

Re: How do I adjust investment account loss or gain

Posted: Thu Jul 30, 2020 5:58 pm
by philwells1
Neil, Thanks for the ideas. I'm new at this and not an accountant. I wonder why you wouldn't use the Mutual Fund account EF-1330-000 and use it with the EF-1335-000 for both a gain or a loss. I don't understand the use of the EF-3115-000 Fund Balance/Net Assets.
EF-1330-000 Debit $1000
EF-1335-000 Credit $1000 for a gain

or EF-1330-000 Credit $1000
EF-1335-000 Debit $1000 for a loss

Again, I am new to this software so your explanation would be very helpful.

Thanks, phil w.

Re: How do I adjust investment account loss or gain

Posted: Thu Jul 30, 2020 9:35 pm
by NeilZ
philwells1 wrote:
Thu Jul 30, 2020 5:58 pm
Neil, Thanks for the ideas. I'm new at this and not an accountant. I wonder why you wouldn't use the Mutual Fund account EF-1330-000 and use it with the EF-1335-000 for both a gain or a loss. I don't understand the use of the EF-3115-000 Fund Balance/Net Assets.
EF-1330-000 Debit $1000
EF-1335-000 Credit $1000 for a gain

or EF-1330-000 Credit $1000
EF-1335-000 Debit $1000 for a loss

Again, I am new to this software so your explanation would be very helpful.

Thanks, phil w.
The reason is that you do NOT want to show these UNREALIZED gains as income or expense, which is what will happen doing it the way you list. This method updates the Balance Sheet correctly, but you're not really seeing the income until you redeem some mutual fund shares. Those funds show up through a quick transaction with a CR from the mutual fund and a DB to the checking account. Because I then want to show this income in operations, I use Transfer Accounts to show that funds were transferred in to Operations, which then show up on the Income & Expense statement.

Re: How do I adjust investment account loss or gain

Posted: Fri Jul 31, 2020 12:55 pm
by philwells1
Well, I guess I am totally confused by the new account EF-3115-000. If our funds are at the Diocese and if the balance of the account increases, I still don't see why you need a separate account to show this. If we drew out the funds from the Diocese (they are ours), then we would have the increased or decreased amount...so it would seem that we actually do have the income or expense from the gain or loss.
We have a fund account: Vestry Discretionary Fund 01-1140-000 and an Investment Fund 01-1300-000. Why do you have EF on your accounts?
These were set up quite a while back and essentially function as the same. Would I develop a fund 01-1145-000 for the Mutual Fund gain/loss and the other as 01-3115-000 for unrealized gains/losses? Since the VDF is essentially our investment account, wouldn't that be the one that I should utilize?
phil w.

Re: How do I adjust investment account loss or gain

Posted: Fri Jul 31, 2020 5:18 pm
by NeilZ
philwells1 wrote:
Fri Jul 31, 2020 12:55 pm
Well, I guess I am totally confused by the new account EF-3115-000. If our funds are at the Diocese and if the balance of the account increases, I still don't see why you need a separate account to show this. If we drew out the funds from the Diocese (they are ours), then we would have the increased or decreased amount...so it would seem that we actually do have the income or expense from the gain or loss.
We have a fund account: Vestry Discretionary Fund 01-1140-000 and an Investment Fund 01-1300-000. Why do you have EF on your accounts?
These were set up quite a while back and essentially function as the same. Would I develop a fund 01-1145-000 for the Mutual Fund gain/loss and the other as 01-3115-000 for unrealized gains/losses? Since the VDF is essentially our investment account, wouldn't that be the one that I should utilize?
phil w.
Its a fund balance account, the discretionary fund is not a fund balance account, its an asset account.

The "EF" is the Accounting Fund identifier, "01" defaults to the operations fund, we keep our investments outside of the operations fund as that tends to give the wrong impression of the balances in Operations. As a church, you operate on a cash basis, what comes in, should go out. Keeping say $100,000 in mutual fund investments under operations when the actual checking account shows 5,000, skews the balance sheet, and most congregants have no idea how to differentiate between ready assets (cash) from a liquid asset that is not directly accessible.

These are suggestions, you can use them or not. I would suggest you talk to an accountant who understands fund balance (cash basis) accounting.

Re: How do I adjust investment account loss or gain

Posted: Fri Jul 31, 2020 6:00 pm
by philwells1
Thanks.