Quickbooks vs Quicken: tracking stock market investments


Z

Z Man

I am attempting to put a client on QuickBooks 2003. This particular company,
a limited partnership, has an investment account with Wachovia Securities. I
have all the monthly brokerage statements for 2005. In reviewing the January
statement, I see several stock and bond purchases, and numerous dividends
and interest payments. I don't know exactly how to enter these transactions.
The simplest way would be to simply use the Register to enter the purchases
as cash disbursements, and the interest and dividends as income. The ending
cash balance should always equal the statement balance, just like a bank
account.

I have some experience tracking investments in Quicken. That program has a
very sophisticated process for tracking investments. For example, with my
Ameritrade account, I can automatically download all activity, including
purchases sales, income, dividend reinvestments, and just about everything
else.

Does QuickBooks have investment tracking features similar to Quicken? If
not, what is the best practice for entering my brokerage account
transactions? And, some specific questions: (1) who is the payee when stocks
are purchased? (2) should I enter each dividend or interest payment
separately, or should I enter the brokerage statement totals, and possibly
run up a monthly analysis on an Excel spreadsheet? I am pretty familiar with
both Quicken and QuickBooks, but this is my first time entering investment
activity in QuickBooks, and I would let to get off to the right start. Any
helpful hints or suggestions would be greatly appreciated.
 
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A

Allan Martin

There is no rule that says you can't use both programs. I have been using
Quicken to track investment accounts for my clients for many years and it
works just fine and makes my job much simplier.

All you need to do is set up a balance sheet account in QuickBooks for each
Investment account you will be tracking along with any income, expense,
margin liability accounts etc. as required.

At the end of the accounting period print out the required reports in
Quicken and use them to draft a simple journal entry in QB to record the
investment activity and adjust the value of the investment account(s).

Naturally any monies flowing into and out of the company's regular checking
accounts simply get posted to the investment account(s).

The exact mechanics of this method are beyond the scope of this newgroup but
if you have a good grasp of debits and credits it is not difficult and you
can figure it out on your own. If you do not, then you would need training
from someone who does in order to use this method.

In any event, trying to track investment activity in QB can be done but is
very limited in functionality. In most cases a journal entry at the end of
an accounting period is the way to go.
 
Z

Z Man

Allan Martin said:
There is no rule that says you can't use both programs. I have been using
Quicken to track investment accounts for my clients for many years and it
works just fine and makes my job much simplier.

All you need to do is set up a balance sheet account in QuickBooks for each
Investment account you will be tracking along with any income, expense,
margin liability accounts etc. as required.

At the end of the accounting period print out the required reports in
Quicken and use them to draft a simple journal entry in QB to record the
investment activity and adjust the value of the investment account(s).

Naturally any monies flowing into and out of the company's regular checking
accounts simply get posted to the investment account(s).

The exact mechanics of this method are beyond the scope of this newgroup but
if you have a good grasp of debits and credits it is not difficult and you
can figure it out on your own. If you do not, then you would need training
from someone who does in order to use this method.

In any event, trying to track investment activity in QB can be done but is
very limited in functionality. In most cases a journal entry at the end of
an accounting period is the way to go.
This is a business environment, and we cannot use two programs. It would
create too much confusion. It was my impression that QB has no real
investment functionality beyond periodic journal entries, and you just
confirmed that this is the case. I still have to figure out what to do with
individual stock transactions and interest/dividends. I have the opening
cost basis of the portfolio as of 1/1/05, but I don't know if I should enter
each security, or just the balance sheet total. When interest income or
dividends are received I have the same issue, whether to record the income
in one account, or set up sub accounts for the income on each security. At t
his point, I lean towards separate asset accounts for each security, but
combining all income into either Dividend Income or Interest Income (with
separate G/L accounts for tax free income, if any).
 
A

Allan Martin

Z Man said:
This is a business environment, and we cannot use two programs.
What government agency would ever pass a law prohibiting a business from
using more than one accounting tool? You must located in the town of stupid.
I feel your pain. Can you imagine if they pass a law prohibiting builders
from using any other tool except a hammer. Those poor bastards will have to
go around treating everything like a nail.
 
Z

Z Man

Allan Martin said:
What government agency would ever pass a law prohibiting a business from
using more than one accounting tool? You must located in the town of stupid.
I feel your pain. Can you imagine if they pass a law prohibiting builders
from using any other tool except a hammer. Those poor bastards will have to
go around treating everything like a nail.
I didn't say there was a law, I was just saying that using a combination of
two programs is going to inject into the process a level of complexity that
I don't think will work. There are a lot of transactions, and there might be
several staffers working on the file at the same or different times. I don't
want to have to coordinate this with recording investment transactions in a
separate program, then having to record the resulting data in QB. Sorry if I
was unclear in my original post.
 
A

Allan Martin

I didn't say there was a law, I was just saying that using a combination
of
two programs is going to inject into the process a level of complexity
that
I don't think will work. There are a lot of transactions, and there might
be
several staffers working on the file at the same or different times. I
don't
want to have to coordinate this with recording investment transactions in
a
separate program, then having to record the resulting data in QB. Sorry if
I
was unclear in my original post.

Your making this a lot more complicated then it really is. The job of
recording the investment transactions would normally be given to a single
person. In many cases the monthly summary can be taken directly off the
brokers statement and journalized into QB. The broker in many cases will
even maintain basis information so if a security is sold they can supply a
report showing the actual gain of loss along with holding periods. If you
are using a full service broker that maintains this type of detail then
there is no need for Quicken or other recording keeping The broker does it
for you.
 
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W

Will

We actually break out stock, options, and dividends into Microsoft Money,
then post summary numbers from reports into Quickbooks.

This is one area where Microsoft has done something truly brilliant. Money
was able to handle extremely complex and subtle options transactions, both
long and short positions, while at the same time staying very user friendly.
Quicken to contrast was simply out of its league. It didn't understand
many options, didn't do short options correctly, and in generally was very
cumbersome to use once you got beyond a handful of transactions per year.

Quickbooks is not the tool to hold the detail. They don't have automatic
download from major brokerages, and they just don't have the built in
features for matching different parts of a position. We just create other
income categories for short term and long term capital gains in Quickbooks
and post summary numbers there.
 
A

Allan Martin

Will,

Well I'll be darned. We agree with each other. If a user needs to track
security transactions then using a program made for this purpose is the
logical method. I personally have never had any problems using Quicken so I
can't speak to its limitations. In any event it really does not matter. You
use the tool that matches the job, be it Money or Quicken.
 
Z

Z Man

Allan Martin said:
Will,

Well I'll be darned. We agree with each other. If a user needs to track
security transactions then using a program made for this purpose is the
logical method. I personally have never had any problems using Quicken so
I can't speak to its limitations. In any event it really does not matter.
You use the tool that matches the job, be it Money or Quicken.
I'm the person that started this thread, and took issue with the concept of
using both Quicken and QB for the same task. I have resolved my issue using
QB only. I have started 1/1/05 with a balance sheet account that comprises
the cost basis of every security purchased since the beginning of time that
was still held as of 1/1/05. That's about 75 securities. When a security is
bought, we will enter the transaction in the register, reducing the
brokerage cash balance and debiting the balance sheet account. When we sell
a security, we will again use the register, to record the increase in
brokerage account cash, credit the balance sheet account for the cost, and
the difference will be gain or loss. Based upon our examination of the first
seven months of 2005, that should work out pretty well. We will also use an
Excel spreadsheet to roll forward the balance sheet detail, so we will
always know our inventory at cost.

I never suggested that QB had to be used for every purpose without any
supporting programs. My current method uses Excel in addition to QB. I used
to work as in internal accountant for an investor that made about 25-50
trades per day. At the end of each month, he sent his brokerage statement to
a company (cannot remember the same, was years ago) that analyzed the
hundreds of transactions, including short sales, option sales, and options
purchases, and compiled the results into a report. Having said that, I would
still opt to keep everything in one program where possible. If done that
way, you don't have to go anywhere else for the details. When feasible,
using one program is more efficient and makes for better record keeping.
Clear?
 
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A

Allan Martin

Z Man said:
I'm the person that started this thread, and took issue with the concept
of using both Quicken and QB for the same task. I have resolved my issue
using QB only. I have started 1/1/05 with a balance sheet account that
comprises the cost basis of every security purchased since the beginning
of time that was still held as of 1/1/05. That's about 75 securities. When
a security is bought, we will enter the transaction in the register,
reducing the brokerage cash balance and debiting the balance sheet
account. When we sell a security, we will again use the register, to
record the increase in brokerage account cash, credit the balance sheet
account for the cost, and the difference will be gain or loss. Based upon
our examination of the first seven months of 2005, that should work out
pretty well. We will also use an Excel spreadsheet to roll forward the
balance sheet detail, so we will always know our inventory at cost.

I never suggested that QB had to be used for every purpose without any
supporting programs. My current method uses Excel in addition to QB. I
used to work as in internal accountant for an investor that made about
25-50 trades per day. At the end of each month, he sent his brokerage
statement to a company (cannot remember the same, was years ago) that
analyzed the hundreds of transactions, including short sales, option
sales, and options purchases, and compiled the results into a report.
Having said that, I would still opt to keep everything in one program
where possible. If done that way, you don't have to go anywhere else for
the details. When feasible, using one program is more efficient and makes
for better record keeping. Clear?
Cyrstal Clear. You decided to use Excel as the other program to track your
investments. I prefer Quicken and my good buddy Will prefers MS Money. Each
tool works, however some are more far more suited to the task.

There are also many times where the statments alone supplied by the broker
are sufficent to post a summary of investment transactions into QB. Just got
to love them B boys and their fancy computers.
 

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