Using multiple currencies

[Mike or Penny Novack]

On 5/6/2016 5:18 PM, John Ralls wrote:
> On May 6, 2016, at 1:05 PM, Ruth Morley <morley.ruth at gmail.com> wrote:
>
> Newbie - I have built a chart of accounts for here in the US and included
> assets and expenses in France. When I enter my transactions against my
> French bank it asks for an exchange rate and enters them in USD. I have
> described this as a euro account and want to keep it in euros. Can I do
> that? How?
> To avoid exchange rates both split accounts must be in the same currency, so you need to have a set of expense accounts denominated in EUR and be sure to use those accounts for transactions with your EUR asset accounts.
>
> Regards,
> John Ralls
>
Something we haven't been discussing is the PURPOSE of having different 
currencies, in other words, how that fits into one's economic life. 
Because THAT might be a major factor in deciding the best way to proceed.

Much of the advice so far has been for the situation where one is 
primarily focused on one currency or transfers between the currencies 
frequent. But there is another possible situation, where economic life 
in one currency fairly distinct from the other and transfers between 
them rare. For example, people who part of the year live in one place 
and part of the year in another and transfers of funds fairly rare and 
might be timed to take place when exchange rates are favorable (rather 
than when expenses incurred, assuming of course, that current assets in 
each place sufficient to allow that).

In a situation like that might want to consider separate books. It is, 
after all, not a big deal to at any time figure net worth from a balance 
sheet for both (and applying the exchange rate) and can be done in 
EITHER direction. Note also that the rules of the two jurisdictions 
might well also be a factor in making the decision, all in one set of 
books or two << for example, if neither jurisdiction requires disclosure 
of "foreign holdings" you probably want separate books ---- that 
consideration might even apply to situations when all in a single 
currency >>

Michael D Novack