[GNC] closing of books and multiple currencies: a question on exchanges

[Andrea Borgia]

Hello, David.


Finally had time to go over your explanation with the books open, I'm 
adding my observations inline.


> If I read it correctly you will have paid originally in totally €320.44 for
> the laptop (€313.21 cost of the laptop + US$7.23 shipping/commission fees,
> which would have been a total cost in € which was presumable expensed
> against Costi:Euro:Elettronica/Fotografia in the purchase transaction.

It's even weirder than that, actually: the defective laptop costed 
313.21EUR inclusive shipping but they did not reimburse the amount paid, 
rather the base cost of the laptop plus what I spent to send it back, 
that's why they had to make an extra payment on top of the paypal 
reversal. I can understand the logic, I'm fine with it.


> Technically it would have been better to have recorded that at the time of
> the refund not during the closing operation by using a multicurrency
> transaction refund to Costi:Euro:Elettronica/Fotografia rather than
> Costi:Dollari:Elettronica/Fotografia in 04  which would have forced the
> currency exchange at that point. Then in 06 you would only have to close the
> fees and commissions $0.69 to Risultatao:Dollari.

I think I'll have to keep the two transactions separate because the 
dates, one day apart, would not match the respective entries in Paypal 
but I will retroactively change the currency as you suggest.

I had always naively assumed that income / expense accounts had to match 
the currency of the asset, not because some limitation of gnucash, 
rather because that was "The One True Way" to do it.


> My preference would be to keep all expense accounts in € (including the fees
> and commissions) and force the currency conversions at the time they
> occurred in 04. Then there would be no closing transactions from any foreign
> currency accounts. Whether this is possible for you may depend on your
> jurisdictional rules for recording  transactions in foreign currencies. You
> may need to consult a local accountant to advise you on this.

My current setup is perhaps a consequence of my life: I began using it 
in 1999 here in Italy (ITL at the time), then I spent nearly all of 2001 
in Finland, right before the changeover to EUR. Since I was paid in FIM, 
it came naturally to me to create income / expense accounts in FIM and 
well. When I travelled to Estonia on holiday, I recorded the expenses 
against EEK-denominated expense accounts and of course the EEK result 
was a net negative. I still had some FIM left when I came back to Italy 
and the finnish bank later did the FIM-EUR conversion for me. Anyway, to 
cut to the chase, that's how I got the idea of using the same currency 
for expenses as the asset I used.


Thanks for the detailed explanation, I have a followup question: this 
year I bought shares in a mutual funds which is listed in USD. 
Naturally, there were 9 dollars of commission on the trade. At the 
moment I have used a USD expense account for that. I'll have to move 
this as well if I don't want a funny result like above, right?


Andrea.