Multiple Currencies

[deane at mjollnir.gooroos.com]

I'm still struggling to use GnuCash for my business due to multiple
currency issues and wondered if anyone out there had any insights on the
matter.


Our company works mainly in Canadian dollars (CAD) but does a lot of
business in US dollars (USD).  What I've been doing is maintaining
everything in CAD.  When we send out an invoice in USD I get that day's
exchange rate, convert it to CAD and enter that into an Income account,
along with a note containing the original USD amount.

When payment arrives (in USD), I once again convert it into CAD using that
day's exchange rate and transfer that amount from the Income account into
an Asset account for Uncashed Cheques.  Since the exchange rate will
doubtless be different from when I first entered the invoice into the
Income account, I take the difference and enter it into either an F/X Gains
income account, or an F/X Losses expense account.

When the cheque is finally cashed, I transfer the actual CAD amount out of
the Uncashed Cheques account and into the company Bank account.  Again, any
difference due to changes in the exchange rate get entered into the F/X
Gains or F/X Losses accounts.

This approach has several advantages, not least of which is that the books
always balance.  However, it does not work well with GnuCash and ends up
being fiendishly complicated.  For example, I have to more-or-less manually
match up payments with invoices (I'm not using GnuCash invoices) and
calculate the exchange rates by hand.  Then I must do the same again when
the cheque is cashed.


I've recently been toying with a different approach, which is to set up
separate CAD and USD accounts.  That works nicely, until year-end when the
Income and Expense balances must be rolled into the Owner's Equity account.

For example, let's say that during the year my entire income consists of a
single USD10,000 contract and I had no expenses.  Payment arrives and the
cheque is cashed at a rate of 1.4 leaving me with CAD14,000 in the bank
account.  So my assets have increased CAD14,000 and my liabilities are
unchanged, meaning CAD14,000 in profit for the year.

At end of year, I must close out the Income account into Owner's Equity,
which is a CAD account.  At that time the exchange rate has dropped to 1.3.
So if I just convert using the prevailing rate, I'll end up with an
increase in Equity of CAD13,000 which is not right: it should match the
net profit.

The only solution I can see is to transfer the income from the USD Income
account to the CAD Income account at the same time as I cash the cheque,
using the same exchange rate.

However, that once again puts me back to having to match up payments and
invoices by hand.


Anyone have any ideas on how to better deal with this in GnuCash?

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  - deane                          Gooroos Software: Plugging you into Maya

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