That old chestnut - multi currency

[Mike or Penny Novack]

>It doesn't get any further than that with my accountant.  If the trial
>balance doesn't balance then the accounts are wrong, end of story.  He won't
>accept them.  Showing him an 'unrealised gains' entry in the Balance sheet
>doesn't cut it.  "From where" he says, "account for them!"
>
>So I am stuck with manual currency trading accounts as per Peter Selinger. 
>His proposal may not solve all predicaments but it would work for me.
>
>Other than that it's a great application.
>Regards
>Twig
>
Curious, that "from where"?

I would ask this accountant a simple question. "If I had done a 
transaction in some foreign currency on one date but had not yet 
"brought it home" (had the currency conversion performed at some know 
rate) how would you want this recorded (namely the fact that TODAY the 
exchange rate is different) assuming that we were back in the days of 
pen and ink on paper accounting.

Although I am not an accountant to me the source of the "unrealized 
gains" (or losses) is obvious, namely the change in exchange rates 
during the time you had non-zero account balances in some foreign 
currencies. In effect in addition to your normal (intended) business 
activities you are perforce doing a bit of trading in foreign 
currencies. This would be more obvious were the situation were one of 
gross variation in rates as sometimes happens as in those sad cases 
where hyperinflation, etc. is so severe that people have to try to use 
money immediately as in a few days its value relative to goods might be 
far less, certainly by the end of the month, etc.

In other words, the fact that you  purchase goods on one date (in some 
foreign currency) and pay for them at some later date (in that currency) 
IS a source of potential gains and/or losses in currency trading.

Michael