Basic Accounting Concepts
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Basic Accounting Concepts Some users are having trouble figuring out how to enter
certain transactions. Maybe I should dwell upon a few basic concepts in
investment club accounting. When you go to Accounting in bivio, there
are five different sections from which to choose -
Accounts, Investments,
Members, Reports, and
Taxes. By default, you will land in the
Investment section. Since there are many different
ways to record a transaction, many of them not correct, it is important that a
few guidelines be observed. Any transactions dealing with a member, should be
entered through the Member section. This includes
payments from members, fees from members, and member withdrawals. If a member
submits a check that is 'bounced' by the bank, make a negative payment for that
amount. If you wish to charge the member a fee for the NSF check, record the
receipt from the member as a Fee. Do not record any
transaction dealing with members through the Account
section. This will result in a profit or loss item. Member
transactions should be an increase or decrease to their capital account, not a
taxable item.
Record all transactions dealing with investments through
the Investment section. This will include stock
purchases, stock sales, dividends, reinvested dividends, returns of capital,
stock splits, stock spin-offs, and mergers. Again, do not record any of the
above transactions through the Account section. It
will result in a duplication of income.
In the Account section, you will
record transactions that are neither Member or
Security transactions. This will include club expenses
like postage, supplies, etc and interest on the checking/brokerage accounts.
This type of transaction will result in an income or expense item. You will also
use the Account section to transfer funds between
accounts. Transfers do not result in income/expense items.
Sticking to these few basic rules will go a long way in
keeping your records up to date and in balance with your bank/brokerage
statements.
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