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

[Derek Atkins]

Leo Breebaart <leo at lspace.org> writes:

[snip]
> 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?

If you're just traveling then what I would recommend is that you
still keep track of everything in your native currency.  In the txn
description (or memo) you can write the amount of foreign currency
spent, but I see little reason to keep track in the foreign currency
for things like that.

For example, when I travel to Canada from the US, I would just record
the US-converted costs of my travel, meals, and hotel.  I'm going to
write the expense report based on that, not on the CAD amounts.
(Actually, I have to report both, but I'm being reimbursed in USD, not
CAD)..

So, unless you really have a foreign BANK account I see little reason
track the foreign currency.

Hopefully a future version of gnucash will handle this better.

Just my $0.02.

-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
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