Working with multiple currencies

hendrik at hendrik at
Wed Oct 4 14:50:28 EDT 2006

On Tue, Oct 03, 2006 at 02:24:15AM +0300, 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?

I suspect that the expenses should always be read in their original 
currency to be truly meaningful.  I've always thought that truly 
multicurrency totals would say you've spent 375 Euros, 34 
Australian dollars, and five Cnadian cents on something.  But my version 
of Gnucash only displays one total on the account summary window.  I 
realize that implementing this (every amount of money anywhere 
being potentially a sum of different currencies) would probably be more 
work than it's worth, not to mention the screen layout nightmare, so 
I've kept quiet about this.  (I didn't keep quiet about the use of floating 
point numbers for currency many years back, because it really 
mattered.  It ultimately caused a revolution in file format)

-- hendrik
> -- 
> Manousaridis Angelos
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