understanding currency exchange...

[John Ralls]

> On Nov 10, 2015, at 11:53 AM, Joshua Chambers <chambers.joshua at gmail.com> wrote:
> 
> Okay, so I still can't get the currency exchange dialog to work in a way
> that makes sense to me.  I've just re-read the tutorial it all, and I
> must say it lacks screenshots of what the transactions look like after
> the currency exchange dialog... let me give a simple example and please
> point out what I'm doing wrong.
> 
> I have two asset accounts...
> 
> -Assets:Exchanges:Benjamin (USD)
> (a friend who I made a small loan to)
> 
> and...
> 
> -Assets:Holdings:Cash:Euros (EUR)
> (my holdings in Euro cash, of course I have one for dollars too, but it
> isn't relevant here)
> 
> Now, I understand that in double entry accounting, all the accounts need
> to be balanced against each other.  I've been using gnucash for years
> now to keep track of my personal accounts and some non-profits and I
> really like it and get it!
> 
> However, with different currencies, two different "numbers" are actually
> of equal value... so in the case of the small loan I made to my friend,
> he paid me back when I visited him in Austria, paid me back in Euros...
> and the rough exchange rate we made at the time (close to the current
> one), is he owed $500 and paid EUR450 back.  These were equal (and still
> roughly are).  That is an exchange rate of 0.9.
> 
> So I go to enter this transaction into gnucash (newest version 2.6.9)...
> no matter what exchange rate I enter in the exchange rate dialog, once I
> come back to the transaction I still cannot have those two be the only
> parts of the transaction, I am still left over with "50" to deal with,
> but there shouldn't BE 50 anythings left over, because 500USD = 450EUR @ .9!
> 
> Account                                    Debit           Credit
> Assets:Exchanges:Benjamin    USD500
> Assets:Holdings:Cash:Euros                         EUR450
> (this is where I'm asked to balance it with another account, and if I
> leave it blank, it becomes "Imbalance-USD")
> 
> So please tell me I'm missing something.  I would expect that there
> needs to be some indication in the transaction what the exchange rate is
> that allows them to balance up.  I would really appreciate your insight
> on this confusion of mine.

Do it just like that, then right-click in the Euro split. Select “Edit Exchange Rate” and set the amount to 500, then click OK. Click the empty split and the transaction should balance (no little gray ‘x’-boxes in the credit and debit entries).

It’s more automatic if you do the transaction in basic view or use Actions>Transfer. In that case you’d specify the amount in USD and GnuCash would notice that the other account is Euro and present the exchange rate part of the dialog for you to enter the rate or the Euro amount.

In currency accounts one sees only the amount of the split in the register, so there isn’t any visible change when you enter the price except that it looks like an unbalanced transaction because what actually balances is the invisible “value” — the amount priced in the transaction commodity.

Regards,
John Ralls