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.
Rip West
Ridgway, CO