Multi-Currency Postings
CAPITAL GL Controller is able to maintain the balances of postings to account codes in your business' base currency and in other currencies, based on the currencies used in your transactions. The system's 'multi-dimensional ledger' structure permits you to track these balances separately. This can be useful when you wish to know the balance of an account (or the applicable portion of that balance) in Yen, US dollars, UK pounds, or whatever currency you need track, as per the end of the reporting period (rather than as at the time the transaction was entered). This then permits the easy calculation of 'unrealized' foreign currency gain or loss for the financial period.
A
'realized' profit or loss occurs when a transaction's balance owing or owed is finalized. For example,
imagine you purchased goods to the value of US $1000 dollars at the exchange rate of .75 of your base
currency as per the first day of the month:
1st of June, US $1000 / .75 = (base currency) $1333.33
Debit Purchases $1333.33
Credit Trade Creditors $1333.33
If the transaction was then paid two months later, at which point the exchange rate may have changed, then there would be a 'realized' profit or loss. If the exchange rate at the time of payment of the account was .73 then the payment transaction would be:
1st of August, US$1000 / .73 = (base currency) $1369.86
Credit Bank $1369.86
Debit Trade Creditors $1333.33
Debit Exchange Loss $36.53
In this case the transaction is finalized and the profit or loss caused by exchange rate movement is determined and taken into account in the general ledger, by appropriate postings to the bank, trade creditors and exchange profit or loss accounts.
On the other hand, an 'unrealized' foreign exchange gain or loss is the calculation of the effect of foreign exchange movement before transactions have been finalized. This might be calculated for the end of a financial period or for the end of the financial year. This can be useful for specific accounting purposes or for reporting balances outstanding as per a particular period in time, for foreign subsidiary reporting.
Hints & Tips
Journal postings that are consolidated cannot also contain currency values other than the base converted currency total for each applicable account.
Stock adjustments, closing stock postings, and most automatic or control postings to local inventory are always assumed to be in local or base currency. However, you may post general journals to such accounts in a non-base currency if required.
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