Investment Club Accounting Concepts - Bivio
Investment Club Accounting Concepts - Bivio
Investment Club Accounting Concepts - Bivio
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Reporting Activities<br />
Valuation Statement<br />
A valuation statement shows the calculation of a club’s unit value on a particular<br />
valuation date. (See Unit Value and Valuation Date.) The statement shows basic<br />
information about all club assets as well as the total number of club units. This includes<br />
information about all securities held, and the cash balance in all accounts.<br />
Traditionally, a valuation statement also shows the purchase cost of all club securities and<br />
the club’s capital gain or loss for each security. Depending on the club accounting<br />
software being used, compound annualized return for the club’s investment in each<br />
security may also be shown (although the usefulness of that information is arguable).<br />
Member Status Report<br />
A member status report shows a summary of each club member’s ownership on a<br />
particular valuation date. For each member the report shows total dollars invested, tax<br />
basis, club units owned, and the current value of those units. Also shown are dollars<br />
recently invested and the number of units those dollars purchased.<br />
<strong>Club</strong> Bookkeeping Reports<br />
All club accounting software produces the Valuation Statement and the Member Status<br />
Report. These are the two fundamental club account reports and are generally made<br />
available to all members each month at the club meeting. All club accounting software<br />
produces a variety of other reports too. The additional reports vary depending on which<br />
club accounting software is being used.<br />
A recent transactions report is also useful to provide monthly. All club accounting<br />
software produces a report that shows all transactions in each account during a specific<br />
time period. This report is very useful for reconciling an account in the club accounting<br />
software with the monthly financial statement for that account issued by the club’s broker<br />
or bank (similar to reconciling your personal checking account with its bank statement).<br />
Other reports … ???<br />
Withdrawal Report<br />
When a club member withdrawals some or all of their club investment, the withdrawing<br />
member will need to know a variety of tax related information about the withdrawal. The<br />
member’s year-end K-1 form issued by the club will not contain that information. The<br />
purpose of the withdrawal report is to provide a withdrawing member with the tax<br />
information they need about their withdrawal. (The purpose of the K-1 form is to show a<br />
member their proportionate share of club income and expenses. A member’s gain/loss<br />
upon withdrawal is not a part of club income or expenses and, so, appears on the<br />
withdrawal report rather than the K-1 form.)<br />
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