Surendra Shah
(Chartered Accountants)
(35 Points)
Replied 06 December 2007
You can debit purchase and credit the brokers account for purchases and square up the total in a journal entry upto a month(YTD) by debiting Investment in shares and crediting the purchase account. This will nullify purchases account. It goes without saying that purchase and sales are profit and loss items and Broker and Investment in shares are Balance sheet items.
The whole process will reverse for sales.
Then, another entry is passed by Debiting Investment in shares and crediting the profit or loss on sale of shares account( a Profit and loss item) for profits and vice-versa for losses. The profit amount shall come from the stock summary statement under the column head profit in the “shares†category of Inventory.
Provided you do no data entry error, the Investment in shares total closing stock amount in the stock summary shall exactly tally with the trial balance Investment in shares account with a difference of a few paisa at times which can be rounded off at the year end in the Investment in shares account on the accounts side.
This is just a sort of standby arrangement but the important thing is that Tally is accurate. The unfortunate part is that the real value of the shares on market values and paper profits is not available at any given point in time which is critical information. I don’t understand that when Tally can do such a wonderful job with things like Vat and all the multilingual stuff, what they have got against the stock market?. With the kind of reputation they have got, portfolio with their accounting should sell like hotcakes since their inventory is so accurate. All they have to do is add a capital gains tax calculation module.
You can follow the same procedure with mutual funds, bonds , fixed deposits etc. Bonds and Fixed deposit will obviously not show any profit but the accounts and Inventory shall tally and Tally shall live upto its name which is what accounts is all about.
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