tutorial on multi-currency accounting

[Mike Alexander]

--On March 7, 2007 12:29:04 AM -0400 Peter Selinger 
<selinger at mathstat.dal.ca> wrote:

>> You mean the old 1.8 currency accounts?  No, I don't use them.  I
>> don't  recall what they were like and I'm not sure if it's a good
>> idea to  recycle them for this purpose or not.  Right now it creates
>> top level  Imbalance-xxx accounts for this just like it does for
>> value imbalances.  I will probably change this to look for a
>> Currency place-holder account  and find (or create) an income
>> account below this as suggested in  Peter's document.
>
> I wonder whether, in this particular instance, an Imbalance account or
> a Currency account (as defined in my document) is more appropriate.
>
> Is the purpose to "fix" a transaction that is not balanced? By putting
> it into a Currency account, you would be effectively inventing an
> exchange that may not have actually have taken place, and an (implied)
> exchange rate. By putting it under Imbalance, you are asking the user
> to fix it.
>
> On the other hand, if the purpose is to "convert" a set of accounts
> that used to use the old currency method, and that was already
> balanced under the old system, then putting these as Imbalances would
> create a huge mess for the user to clean up by hand.  In this case, it
> would be better to create the correct splits into Currency accounts,
> perhaps using the exchange rate info that was saved with the
> transaction.

You'll note that one of the things I did not do was to turn off the 
exchange rate prompt when entering a transaction involving more than 
one commodity.  This is because it is important to have reasonable 
exchange rates defined for such transactions if you are to maintain the 
rule that the transaction must be balanced in the transaction currency 
as well as in each commodity in the transaction individually.

The transaction balancing code in xaccTransGetImbalance assumes all 
exchange rates are correct.  A transaction involving more than one 
commodity has an implied exchange rate between the commodities which 
can be determined by comparing the amount and value fields of the 
various splits.  This is used to create the new splits to balance the 
individual commodity amounts in the transaction.  The bottom line is 
that the balancing split will be created using the exchange rate 
specified when the transaction was entered which I think is the best we 
can do.

I don't think it matters too much whether the splits created go into an 
Imbalance account or into a currency account.  It's not that hard to 
clean things up.  After scrubbing some transactions you can just delete 
the account the splits went into and you'll get a prompt asking where 
they should be moved to.  Or if you want to move a few splits you can 
use a find register to edit them easily.  On the other hand this 
scrubbing will happen automatically as you enter transactions with 
multiple commodities if you don't create the balancing splits yourself, 
so it would be best to make it work as well as possible.

       Mike