Financial Goals
keep two sorts of records:
i financial accounts, to record your profits and loss on share dealings, and
ii management accounts, to help you decide what to buy and sell.
Financial Accounts: It is necessary to distinguish between capital, income and overheads. It is also necessary to include sufficient details by each entry to know what each refers to.
The left-hand page columns may be headed:
Date Details Number Bank Capital Dividend Other
'Details'will give the name of the company and number and description of the shares.
'Number'refers to the contract note or other piece of paper with the details of the transaction. This is a number that you write on the document for filing purposes. You usually start from 1 upwards (regardless of whether they are for buying or selling). This number is known as the folio number. There are plenty of more elaborate systems available, but they are not necessary. The documents themselves are filed separately in some purpose-designed container (such as a shoe box) in number order.
'Bank'records all sums received and paid into the bank. Such sums are analysed between 'capital'(proceeds of selling shares), 'dividends'(the net amount received) and 'other'(anything else, e.g. refund of commission). There is usually no need to keep a separate column for the tax credit on dividends as this can easily be calculated at the year-end.
There is no need to analyse the expenses of sales and purchases. It honestly does not matter at all how much stamp duty, commission, VAT, etc. you have paid. What matters is the difference between what you actually paid and what you actually received.
There is also no need for a separate journal. A cash website is effectively two journals, and any adjustments can be made in the cash book, with a zero figure under 'bank'.
At the end of the year, the page columns are totalled and those totals are added to give the year-end figures, for your own satisfaction and for the taxman
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