my trip to Austria...

[John Ralls]

> On Nov 1, 2015, at 6:56 PM, Joshua Chambers <chambers.joshua at gmail.com> wrote:
> 
> Hello!  So, I've been using gnucash for a number of years now keeping
> detailed track of all my holdings and expenses.  I've got a pretty good
> system worked out, however recently I took a six-week trip to Austria,
> and of course exchanged money into Euros...
> 
> I am having a very hard time really understanding how best to deal with
> this in gnucash!  I have indeed read a lot about this on the web, and
> I've noticed that a lot that's out there specifically about gnucash is
> quite old, and some of it seems outdated.
> 
> I understand there may be multiple ways to do this.  The currency
> exchange dialog comes up and yet I can't understand how to use it
> properly, and I've read that it's better to ignore it and exchange
> manually with these "TRADING" accounts... and I try to do that, and
> frankly... I'm just a bit lost.
> 
> Then, for expenses... should I re-translate currencies again for each
> expense (at the same rate I changed that particular money at) and just
> use my existing set of expense accounts... that would be cleanest from a
> "what did I spend?" question.. or do I make a new set of "travel
> expense" accounts for each currency I use?
> 
> Here's one odd transaction that's got me a bit stumped... so, I've got
> my asset accounts arranged (in simplified form) like this:
> 
> Assets
> 	-Holdings
> 		--Cash
> 			---Dollars
> 			---Euros
> 		--Checking
> 	-Exchanges
> 		--Benjamin
> 		--Seth
> 
> 
> I use "Exchanges" accounts when buying things for other people or asking
> them to buy things for me, or when I loan or borrow money.  So, Benjamin
> borrowed $300 from me and $200 from Seth, so he owed $500, but my
> Benjamin account showed only $300 of it and was positive (money I'm owed).
> 
> When I was in Austria, Benjamin was there, and he paid me back for both
> those loans, so I'm taking on a debt to Seth... and this is all no
> problem.  However, where the problem comes in is that Benjamin paid me
> back in Euros of course, and at the time the exchange rate was about
> 1.1, so he paid me EUR 450.
> 
> So now my Benjamin account should read 0, my Seth account should read
> $200 and my Euros account should read EUR 450... what do you think is
> the best way to do that?  A little guidance is appreciated.

First of all, using Trading Accounts isn’t a manual workaround. They’re there especially for people who speculate on foreign exchange and need a way to surface their gains and losses, which are normally hidden in GnuCash when dealing in currencies rather than securities.

The rest of this explanation assumes GnuCash 2.6.8 or 2.6.9. Before 2.6.8 there were some problems with the Transfer Dialog that I’ll explain at the end.

Since you were using cash for some of your expenses in Austria and want to keep track of that, you first need to create a 
“Cash in Wallet — Euro” account, whose commodity is Euro. Each time you went to the ATM is a transaction from your regular
bank account in your home currency, which I’m going to declare is USD for the rest of the discussion to save having to type
“your home currency” any more. That cash withdrawal has an amount in Euro — the bank notes you got from the ATM — and a value in USD — the amount that the bank debited (remember the bank sees your account as a liability, so a credit to you is a debit to them). The ratio between the two is the exchange rate; If there were ATM and exchange fees in the mix you might as well just include them in the exchange rate.

When you create that transaction in GnuCash, it puts up the transfer dialog with just the exchange rate part enabled. You could of course create the transaction by using Actions>Transfer which uses the Transfer Dialog, and when you select the two accounts with different commodities the exchange rate section will be enabled. The exchange rate section gives you two options for completing the transaction: You can enter a rate or an amount. It’s almost always easier to enter the amount, and the number will be for the currency will be for the “other” account from the register you had open when you created the transaction; look at the labels to the right of the entries for guidance about which amount (the cash you got or the amount your bank debited) to put into the amount entry.

For spending your Euro you can either create a set of Expense accounts in Euro or you can use your existing USD ones. If you create Euro accounts then there won’t be any further exchange, so the transaction will be like normal all-USD transactions. If you use your USD expense accounts then the Transfer Dialog will come up again. As long as you don’t use F::Q to retrieve updated prices, the most recent one in the price db will be the one from your last ATM transaction, and the Transfer Dialog will propose that as the exchange rate. You can accept that and the expenses will be recorded at the same rate that you got when you withdrew the money, effectively balancing out your withdrawal amount from the bank.

For your payment from Benjamin, just debit Cash-in-Wallet-Euro €450 with Exchanges:Benjamin as the “other” account and put $500 in the amount entry in the Transfer Dialog, since that’s effectively the exchange rate you gave him.

Before 2.6.8, the price suggested by the Transfer Dialog changed every time you created a new transaction, and the rounding to the target currency’s fraction (penny or Euro-cent, depending on which direction the transaction went) can produce rates
that aren’t representable as a decimal, so it could look a little odd. You’ll want to note the rate from the previous withdrawal so that you can re-enter it each time.

Hope this helps.

Regards,
John Ralls