How the System Handles Multi-Currency Transactions

PO and Accounts Payable

• Gain/Loss - When exchange rates increase over time (foreign currency per one unit of domestic currency), the system records a gain and when exchange rates decrease, it records a loss.
• Entry - PO header and line/release costs are entered and stored in the transaction currency. Whenever these amounts are defaulted from the Items file, they are converted using the purchase order exchange rate.
• Receiving - At receiving time, the system records the amount received, cost, and exchange rate. Domestic amounts are posted to the journal using this exchange rate.

Account Numbers Posted (PO Dist)

• Debit- Inventory Account
• Credit- Vouchers Payable

Generating Voucher (PO) and Posting Vouchers (A/P) - When the voucher record is created, the system stores any change in exchange rate from receiving time to voucher generation time as a distribution. The voucher is stored in the transaction currency. When the voucher is posted, domestic amounts are posted to the journal and vendor amounts are put on the posted transactions record along with the exchange rate that was used for posting.

Account Numbers Posted (A/P Dist)

• Credit - Accounts Payable
• Debit- Vouchers payable

Payment - Payments may be entered in any currency. The payment currency is equivalent to the bank currency. The journal entries created from posting the A/P Payment are from the bank currency to the domestic currency, and the GL bank record is in the currency of the bank. When the payment is posted, domestic amounts get posted to the journal, and transaction amounts are put on the Posted Transaction record. At payment posting time, a mini-gain/loss is performed for the voucher and any payments or adjustments to that voucher. All of the posted transactions tied to the voucher will be "upgraded" to the new exchange rate.

• Credit - Cash account (Payment Amt at the new rate)
• Debit - Accounts Payable (Voucher Amt at old rate)

The voucher's Gain/Loss is posted to either Loss (Debit) or Gain (Credit)

CO and Accounts Receivable

• Gain/Loss- When exchange rates decrease over time (foreign currency per one unit of domestic currency), the system records a gain and when exchange rates increase, it records a loss.
• Entry- CO header and line prices are entered and stored in the transaction currency. Whenever these amounts are defaulted from the Items file, they are converted using the current exchange rate.
• Shipping- At shipping time, the amount shipped, price, and exchange rate is recorded. Domestic amounts are posted to the journal using this exchange rate.

Account Numbers Posted (CO Dist)

• Debit - Cost of Good Sold
• Credit - Inventory

Invoice Printing (CO) and Posting (A/R) - When the invoice record is created, any change in exchange rate from Shipping time to invoice printing time is stored as a distribution. The invoice is stored in the transaction currency. When the invoice is posted, domestic amounts are posted to the journal and transaction amounts are put on the Posted Transaction record along with the exchange rate that was used for posting.

Account Numbers Posted (A/R Dist)

• Credit - Sales (Invoice at the Old rate)
• Debit - Accounts Receivable (Invoice at the new rate)

Payment - A payment currency is selected and a bank of a different currency can be used to receive the payment. The bank currency is then used to determine the domestic amount. The journal entries created are from the bank currency to the domestic currency, and the GL bank record is in the currency of the bank. When the payment is posted, domestic amounts get posted to the journal, and transaction amounts are put on the Posted Transaction record. At payment time, a mini-gain/loss is performed for the invoice and any payments, debits or credits to that invoice. All of the Posted transactions tied to the invoice will be upgraded to the new exchange rate.

Account Number Posted (A/R Dist)

• Debit - Cash (Payment Amt at the new rate)
• Credit - Accounts Receivable ( Invoice Amt at the old rate)

Difference to currency Loss (Debit) or Gain Account (Credit)

Gain/Loss Utility

At various times, you may wish to recognize any outstanding Gains or Losses. Run the Gain/Loss utility and specify either A/R, A/P or both.

A/R - Process all Posted A/R Transactions and upgrade them to the current exchange rate. For each invoice that has a gain or loss, post the amount to Accounts Receivable and the Gain or Loss Account.

A/P - Process all outstanding PO Receipts (received but not yet vouchered) and upgrade them to the current exchange rate. For each record that contains a gain or loss, post the amount to Vouchers payable and the Gain or Loss Account.

Process all unposted vouchers and upgrade them to the current exchange rate. For each voucher that has a gain or loss, post the amount to Vouchers Payable and the Gain or Loss Account.

For Gain/Loss Accounts:

• Users establish account records for Gains and Losses.
• The Gain Account is always used to record gains due to exchange rate changes.
• The Loss Account is always used to record losses due to exchange rate changes.

Currency Master

The system contains a currency master file where all currencies are maintained. Users may enter an unlimited number of date- and time-stamped currency exchange rates. They may also back-date these rates by entering a past date. There are two exchange rates entered. The Buying rate is used exclusively in PO and A/P. The selling rate is used exclusively in CO, Estimating, and A/R.

Financial Statements

Users are able to print Financial Statements in different currencies. The exchange rates used to print the report are the rates stored in the database that contains the ledger records being processed. The translations are for display purposes only. No posting of any kind takes place and no gain or loss is calculated.

Translations are defined for each line of the financial statement. Users choose to use the Buying or Selling Exchange rate. They choose one of the following translation methods:

• None (no translation)
• Spot (historic rate for each transaction)
• Current (current exchange rate)
• Average Period (weighted average exchange rate in effect for the accounting period for each transaction)
• End of Period (exchange rate in effect at the end of the accounting period for each transaction).