How to deal with multi currencies

Settings

• Settings -> Configuration -> Accounting

  • Allow multi currencies
    • Gain Exchange Rate Account: Realized Gain
    • Loss Exchange Rate Account: Realized Loss

Realized Gain/Loss

Consider a case the company currency and the trading currency are different.
Debit/Credit in Journal Entry is always registered with the company currency.
If there is a period between Invoice and Payment that generate Journals,
a rate (that the system applies) between the company and trading currencies may change during the period.
Realized Gain/Loss is automatically registered to reconcile this revaluation.

• Purchase Journal (HKD) - 08/2015

Name	Account	Debit	Credit	Amount Currency	Currency
	Accounts Payable (JPY)	0.00	314.03	-5000.00	JPY
Product	GR/IR Cleaning	314.03	0.00	5000.00	JPY

• Bank (JPY) - 09/2015

Name	Account	Debit	Credit	Amount Currency	Currency
change:	Realized Loss	19.30	0.00	0.00	JPY
change:	Accounts Payable (JPY)	0.00	19.30	0.00	JPY
	Accounts Payable (JPY)	333.33	0.00	5000.00	JPY
	Bank (JPY)	0.00	333.33	-5000.00	JPY

Unrealized Gain/Loss

Consider a case the company has Bank or Cash in foreign currency.
If there is a period from Payment with foreign currency,
a rate (that the system applies) between the company and foreign currencies may change during the period.
Unrealized Gain/Loss represents revaluation of assets such as Bank or Cash.
(It is manually registered when it is formally required such as opening/closing.)

• Accounting -> Reporting -> Generic Reporting -> Multi-Currencies -> Unrealized Gain or Loss

Name	Secondary Currency	Exchange Rate	Foreign Balance	Adjusted Balance	Balance	Unrealized Gain or Loss
Bank (JPY)	JPY	16.000000	-5000.00	-312.50	-333.33	20.83
Accounts Payable (JPY)	JPY	16.000000	0.00	0.00	0.00	0.00

They are all the Accounts with Secondary Currency.

• Foreign Balance: total amount for transactions in the second currency
• Adjusted Balance: total amount for transactions in the company currency with current exchange rate
• Balance: Debit/Credit balance for the Accounts
• Unrealized Gain or Loss: Adjusted Balance - Balance

Setting of Partner

• create Pricelists, Pricelist Versions and Accounts Payable/Receivable per currency
• set them for Partners

• When you create Purchase Orders, select the Partner,
  and the Pricelist and currency are automatically proposed.
• When you generate Invoices, select the Partner,
  and the Accounts Payable/Receivable and currency are automatically proposed.

As follows, Pricelist and Pricelist Version determine a rule of Cost Price and Sales Price of a product.

Pricelists

• Pricelist Name: Default Purchase Pricelist
• Pricelist Type: Purchase Pricelist
• Currency: XXX
• Pricelist Versions: Default Purchase Pricelist Version

Pricelist Versions

• Name: Default Purchase Pricelist Version
• Pricelist: Default Purchase Pricelist (XXX)
• Start Date:
• End Date:
• Price List Items
  • Rule Name: Default Purchase Pricelist Line
  • Product:
  • Min. Quantity:
  • Sequence:
  • Price Computation
    • Based on: Cost Price
    • New Price = Base Price * ( 1.00 + 0.00 ) + 0.00
    • Rounding Method:
    • Min. Margin:
    • Max. Margin:

Accounts Payable/Receivable

We should create new Accounts Payable/Receivable with Secondary Currency per currency,
so that the Accounts have consistency between Debit/Credit and Amount Currency
(which is also required when we register Unrealized Gain/Loss).

Setting of Payment Method

• In case the company pays using the trading currency not the company currency,
  we need to create Journals corresponding to Payment Methods

• create Accounts, Sequence and Journals

Accounts

• Accounts Name: Bank (XXX)
• Parent:
• Internal Type: Liquidity
• Account Type: Bank
• Secondary Currency: XXX

Sequences
Settings -> Technical -> Sequences & Identifiers -> Sequences

• Name: Bank (XXX)
• Sequence
  • Prefix: BNKXXX/%(yrear)/s

Journals

• Journal Name: Bank
• Code: BNK
• Type: Bank and Checks
• Default Debit Account: Bank (XXX)
• Default Credit Account: Bank (XXX)
• Currency: XXX
• Advanced Settings
  • Entry Sequence: Bank (XXX)
  • Autopost Created Moves
  • Allow Cancelling Entries

• If you Setup Your Bank Accounts without assignment of Account Journal,
  
  (Accounting -> Configuration -> Accounts -> Setup Your Bank Accounts)
  
  Accounts, Sequences and Journals are automatically generated.