Profit and Loss with foreign currency.

[reubano]

David Bergum wrote
> 
> This isn't exactly a GnuCash issue, but relates to using GnuCash with
> multiple currencies in getting a trial balance to balance.  So I'm sharing
> my experiences in preparing a tax return for our S Corp with information
> from GnuCash, and getting a balance sheet to balance.
> 
> We have some income in NZD and an NZ bank account.  During the time we
> work in NZ we make an international transfer of funds to a US account.  We
> have company expenses in NZ, some of which are payed by credit card and
> converted to USD in the process, and some are paid in cash from
> distributions in NZD from the NZ account.  Those get converted in GnuCash
> to the expense accounts using the current exchange rate.
> 
> When balancing cash/assets at the beginning of the year with cash/assets
> at the end of the year, adding income, subtracting expense, using the
> Balance report and profit and loss report, we invariably end up out of
> balance.  After much hair pulling, I figured out that the NZ income in NZD
> is converted to USD for the profit and loss report using one of several
> methods to obtain an exchange rate, average, weighted average, closest in
> time, latest.  When I calculate my actual NZ income by adding up the
> actual international transfers, I get a different number for an average
> exchange rate.  This number doesn't exactly give me a balance either; it
> is closer, but there are funds left in the NZ account, and there are NZD
> expenses paid in cash that effect the balance.
> 
> So what I have decided to do to make things work, is to just *fudge* the
> NZ income amount in USD to make things balance.  The effective exchange
> rate is very close to what my actual average rate was in the transfers I
> made, but is off a little due to the amount of money left behind in NZ,
> and the direct cash expenses in NZD and how they are converted in the
> expense accounts.
> 
> I don't know what the *proper* way is to do this, but I can very much
> sympathize with multinational companies that have multiple currencies.  It
> just make the head spin.
> 
> Being a total amateur, do you have any similar experiences or know the
> accepted practice in these regards?
> 
> Thanks and regards,
> Dave
> 
> 


Maybe you should look into "trading accounts"

http://www.mscs.dal.ca/~selinger/accounting/tutorial.html#4
http://gnucash.1415818.n4.nabble.com/New-trading-accounts-for-currencies-help-in-setting-up-td3406059.html

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