[GNC] Exchange rate fluctuation changes historic amounts in P&L and BS

[Adrien Monteleone]

The transaction is set in stone, of its base currency.

If you report in a different currency that can change based on exchange 
rates to the reporting currency. This is influenced by the Price Source 
of the report Options in the Commodities tab. Unfortunately, some of 
those options don't work quite right as I understand browsing previous 
threads and IRC.

What I don't see is an option for 'nearest in time' to the transaction. 
Transactions themselves can cause exchange rate entries to the db, and 
that is what should be used in such a case. (really, I don't see a need 
to do a conversion at report time as that info already exists in the 
transaction - but this might only be true with Trading Accounts turned on.)

There might be a bug report on this already, but if not, I'd suggest 
filing one.

Regards,
Adrien

On 6/30/24 9:36 AM, G R Hewitt wrote:
> Fred, thank you for your reply.
> 
> I'm afraid that I don't quite follow the logic of your explanation.
> 
> To me, as far as I am aware, the P&L is, basically, 'How much in' minus
> 'How much out' equals a profit or a loss.
> 
> A finalised transaction, surely, is set in stone - in this case 'Wood' at
> €150 cost me £132.27 on Thursday and was recorded as that in the journals.
> Come Monday, if the rate changes so that wood bought on the Monday now
> costs £128 does not mean I over-paid by £4.27. The price was correct at the
> time and now has changed, that is all. I have not gained or lost anything
> at all. I might think 'Hmm pity I didn't buy it today', but that is
> hindsight not accounting.
> 
> Where I taking the figures from 'pen and ink' journals, the £132.27 and
> €150 would be recorded in the P&L as written in the journals. I can't see
> that I would hurry to find out the exchange rate and write £128 instead of
> £132.27 and then make a journal entry for £4.27 loss to balance the book.
> And that is just one entry, what if it were hundreds?
> 
> If the P&L does not record the actual amounts, how can you ever come to
> rely on it. Suppose you had hundreds of items you could be £1000's of
> pounds out one way or the other if the rate changed on Monday and again on
> Tuesday, how would you ever know what your profit or loss actually was?
> 
> When I was using Sage, the rate on the day was the rate recorded, it never
> changed if the following week when something else was purchased a different
> rate was applied.
> 
> Apart from which, I always thought the Balance sheet is what was used to
> (re)valuate and this would support your reasoning - If my house was
> recorded as an asset of €250,000 and became €275,000 due to a rate change
> I'd be most please and may sell it; but if the revaluation showed it as
> €195,000 then I would not be so inclined.