Multiple Currencies (was: The Accounting Equation does not seem to hold)

[Leo Breebaart]

Derek Atkins <warlord at MIT.EDU> writes:

> Quoting Leo Breebaart <leo at lspace.org>:
>
> > I thought I had learned from the GnuCash docs that the
> > Accounting Equation (Assets - Liabilities = Equity + (Income
> > - Expenses)) is invariant and should by definition hold,
> > [...]
>
> Yes, the equation is correct...

Good, at least I'm not completely off my rocker, then.


> This is a "capital gain/loss" problem. Whenever you exchange
> commodities you need to handle the gain/loss back to your main
> currency. E.g. if I buy 100EUR for $125 and then later sell
> those 100EUR for $130, I've got a "gain" of $5 that I have to
> account for.. I bet you're not accounting for your gain (or
> loss, if it's in the other direction).

I think I see what you mean. My use case is not so much buying
and selling foreign currencies in bulk, but rather that I am
trying to keep track of my personal cash flow, some of which
takes place during trips to other countries, and therefore in
other currencies.

So I figured that if I created separate cash accounts for the
different currencies, I could still keep tracking say
Expenses:Food:Dinner, whether or not I paid for it in EUR (at
home) or in USD (during a trip).

But of course, as you say, different batches of dollars will
still have been bought at different exchange rates when going in
to the cash account, and therefore it is impossible to really
come up with a perfect matching exchange rate for the dollars
that go *out* of it again as individual expenses. Right?

Okay, so now I think I understand what's happening, but I am
still at a loss as to what I should *do* about it. Do I just have
to accept that if I work with multiple currencies I will no
longer get a zero-sum Accounting Equation? Should I start adding
manual Equity transactions to compensate (that seems ugly!)? Is
it perhaps an option to create separate GnuCash files for keeping
track of the separate currencies? 

In short: do other people out there have this same problem at all,
and if so, how do they handle it?

--
Leo Breebaart  <leo at lspace.org>
-- 
Leo Breebaart  <leo at lspace.org>