How to Set Up Treasury Bills

[kalabankro]

Hi,

I need help setting up a (Government) treasury bill in Kmymoney v5.1.3. I have a Principal that generates compounding interest on a 3-month cycle. A treasury bill “account” is maintained by the Central Bank. I can only buy bills via commercial banks. Upon maturity, the balance (Principal + Interest) is briefly deposited into a savings account and automatically debited to purchase a new treasury bill.

So far, I have used an Asset account and added the interest income manually because the Investment account flow confuses me.

I tried creating a security (bond) using the Investment Wizard. I cannot figure out how to start off with an opening Principal. I also want to confirm how to handle interest income - I see an option in the ledger for Interest Income, so I assume that is how to do it.

What is the best way to handle treasury bills?

Best,
Kala

[ostroffjh]

The best way is whatever you are comfortable with. For me, the bottom line is to be able to know where your money is, and to easily prepare accurate reports for preparing your taxes.

If you do treat this as an investment, I would call the price always $1, and adjust the number of shares as you get interest. The alternative is to always own 1 share, and adjust the price when interest is paid. However, that doesn’t let you track the income. Personally, I would call it a plain asset account or even a savings account. If the interest accrues every 3 months, you could create a Scheduled Transaction for the interest payments. It might also be possible to set it up as a loan (you are lending to them) so it can calculate the interest automatically, but I’m not sure it’s worth the effort. As a savings account, the interest income is just handled as a deposit. If it were an Investment account, the interest would be handled as a Dividend transaction, but using the same income Category you would use for the Deposit to a savings account. How you set up the category would depend on whether it is taxable at the national, state, and local levels.

Hope this helps, and feel free to ask more questions.

[kalabankro]

@ostroffjh

and adjust the number of shares as you get interest. The alternative is to always own 1 share, and adjust the price when interest is paid. However, that doesn’t let you track the income. Personally, I would call it a plain asset account or even a savings account. If the interest accrues every 3 months, you could create a Scheduled Transaction for the interest payments. It might also be possible to set it up as a loan (you are lending to them) so it can calculate the interest automatically, but I’m not sure it’s worth the effort. As a savings account, the interest income is just handled as a deposit. If it were an Investment account, the interest would be handled as a Dividend transaction, but using the same income Category you would use for the Deposit to a savings account. How you set up the category would depend on whether it is taxable at the national, state, and local levels.

Thanks, @ostroffjh, and sorry for the late reply. I ended up creating an investment account and “increasing” the balance with the interest payments. Works for me.

[ostroffjh]

As I said, the “best” way is the one you are most comfortable with. There is often more than one way to do things.