Working with multiple currencies

[Ivars Grinbergs]

I'm newbe to GC and accounting, so I might be wrong.

But I think, there should be only one account for expenses in your base 
currency. When you enter currency expenditure split/transaction (from 
currency account register window), you cerdit asset/cash/currency 
account by currency amount, debit expenses account by the same amount 
and while on debit split, enter currency exchange rate for that 
particular transaction.

This way your expenses will not fluctuate due to exchange rate fluctuations.

You can do the same by entering two transactions/splits:
- one to transfer certain amount of foreign currency asset to base 
currency asset;
- second to spend base currency asset by that - converted by certain 
rate - expense amount;

In later case you lose relationship that certain expenditure was made in 
certain currency, unless you do something extra to link those two splits.

wbr,
Ivars

Manousaridis Angelos wrote:
> I am using gnucash to track my personal expenses, nothing extremely
> fancy. All of my accounts are in Euro, but recently I started using some
> accounts in other currencies for money I spend abroad.
>
> I use a "cash" account on a different currency, do a "transfer" to that
> account when I change money to other currencies and then record my
> travel expenses in eccount on that currency. I checked the balance in
> the "expenses" in euros and it is exactly as planed.
>
> My problem is that gnucash calculates everything according to the
> last exchange rate in the Price Editor. This makes sense in the Assets,
> but I don't understand how it makes sense in the expenses.
>
> I will elaborate what I mean with an example.
>
> Lets say that I exchange 100 euros to N dollars and spend them all. I do
> this transaction and enter the rate (N/100). Everythins works fine. My
> assets (cash) are reduced by 100 euros and using USD "accounts" in
> "expenses", gnucash increases my expenses for 100 euros. Now, lets say
> that 5 months later I exchange 100 euros to M dollars. If I make the
> same thing again, ALL my expenses will be calculated using this rate,
> including my old expenses! How is this correct? The old expenses were N
> USD which were translated to 100 euros, now their value will change
> according to the new rate!
>
> Wouldn't it make much more sense if the old expenses were calculated
> with the old rate and the new expenses with the new rate? I can
> understand that assets are always calculated with the latest rate. Any
> leftover dollars would be worth as much as the latest rate suggests. But
> is it the same with expenses?
>
> Am I missing something?
>
>