Hi team,
Does kMyMoney support Trading accounts as noted here?:
" Trading Accounts are used to represent the imbalances caused by a transaction involving two different currencies, as described in the Tutorial." – https://wiki.gnucash.org/wiki/Trading_Accounts
Or does it manage the imbalances in a different way?
I’m going to have to re-read that page several times, as I really didn’t follow the point in my first read. At some point, they mention unrealized gain, which is an issue for Investment Accounts (where you can consider the price of the security as the other currency) but then the example has nothing to do with investments. Then I though that imbalences caused by dealing with two currencies might refer to rounding errors - but no mention of that.
I have extremely little use of multiple currencies, but my understanding is that KMM does not have anything like these trading accounts, and just applies the conversion (based on most recent available price) with the amount in the split for each account in a transaction recorded in the currency of that account.
Hopefully someone with more experience with multiple currencies will add some insight.
Yes it is confusing but you are spot on!
For investments accounts these are considered unrealized gains. Realized once you sell the security. The gain or loss is the price of the security at purchase vs at selling. However for currency exchanges it is different in that in between, you may make purchases with the currency (for food or whatever) which you may capture in your accounting but when you convert your money back to the base currency, you may notice an imbalance.
If I exchange 100 USD to 2000 Mex pesos, that is 1 to 20 conversion. If tomorrow I spend 1000 pesos on food, now I only have 1000 pesos left. If when I change it back the USD is at 1:10, I still have 100 USD. All that happened was that the Mexican pesos grew in strength. Yet my accounting is off because if I track my 1000 pesos worth of food in my food account, now I have an imbalance. I spent money yet my account is the same.
For securities it is fine because the security is not doing anything between the time it is bought to the time it is sold. For currencies it is different.
I would expect our friends in Europe that travel to other countries(non euro) would have ran into this.
I noticed this in reddit:
Some stated the lack of trading accounts is a reason they left kMyMoney.