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Originally posted by jordonez:
I have an amount showing in the cost basis column of the cost basis balance sheet for "unrealized gains or losses." Why does this happen?

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This happens when entries are made to the Balance of an account without properly affecting the account’s Cost Basis. A classic example of this is when an entry is made via the General Journal (which affects the Balance) but no related change is made to the account’s cost basis.

Every transaction you make affects the account’s Balance. However, there are only two ways to affect the Cost Basis. If you affect the Balance but not the Cost Basis, you will have the out of balance condition you describe in your question. The only ways to affect the Cost Basis are:

• Changing the Cost Basis directly, by making the change on the Asset & Liability Information screen. This technique is not recommended because it does not leave a proper audit trail.

• Making an entry that generates a prompt from FN such as “Acquired an Asset?” or “Sold Asset?” and so on. Note that you must be in a cash-type journal for this to happen. You will never see an “Acquired an Asset?” prompt in the General Journal.

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Originally posted by jordonez:
Is there any way to correct it without changing beginning balances? I would like to have my financials "flow" correctly from year to year.

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Yes. This answer assumes that the beginning balances for the year are correct, which means that “Unrealized Gains & Losses” (UGL) will properly show a zero cost basis as of the beginning of the year. In order to make the changes outlined below, you must go back as many years as necessary to get to correct beginning balances.

For purposes of this discussion, “account” refers to a Balance Sheet account. Income Statement accounts don’t have cost basis.

1. Print out the Cost Basis Balance Sheet as of the previous year-end. Verify that UGL has a zero cost basis as of year-end.

2. Switch to the current year. Go to Report Selection and select Balance Sheets. Before you print it, select Options and check Difference. Print out the Cost Basis Balance Sheet for the current month.

3. Review the Difference column on the Cost Basis Balance Sheet. Any of the numbers in that column or a combination of them may be the cause of your non-zero cost basis for UGL.

   The only time you should have difference between Balance and Cost Basis is as the result of proper cost-basis entries. An example of a proper cost basis entry: when you sell a marketable security, Financial Navigator relieves both the account balance and the cost basis. These may be two different amounts, if you have updated the security to market value.

4. If you’ve identified accounts where the Balance and the Cost Basis differ and you can’t explain the difference, print out a Transactions by Account report for that account for the entire year. Any entries to that account that don’t mention “number of shares” is likely to be part of your problem.

5. Delete the problem entries and re-enter them in a cash journal.

6. If you don’t want to clutter up your Checking Account, for example, set up a new account in the Chart of Accounts under the Checking category. Give it a name like Cash Suspense. The balance of Cash Suspense should always be zero.
   

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Originally posted by jordonez:
Does FinNav have any way to make an entry to equity for a prior period adjustment?

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That’s another subject entirely! To help other users locate this information once it’s posted, please post a new question about this under the “Advanced Transaction Entry” Forum.

Thanks for some excellent questions!

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Renée Trudeau
Financial Navigator Service Provider

A shortcut that users have done in the past is if they are completely sure that the cost basis numbers on the Cost Basis Balance Sheet are accurate is to change the beginning balance of the UGL account by the amount that shows up in the Cost Basis column for UGL. That way the UGL balance will equal the amount in the Difference column on Cost Basis Balance Sheet. This shortcut is especially handy if the cost basis was in error in previous years and you don’t want to go back to those years to correct it.

Here is some addtional reading on related topics that may help:
Audit trail
Update cost basis of sold stock in prior year
Cost Basis Balance Sheet
Stock dividend with cost basis change
Current Market Value wrong on balance sheet
Why does Market Value not equal Price x quantity?
Balance differs in later month
Changing Cost Basis

- David
FNI Technical Support
Case #38-10480