Transactions multi-currency accounting

Explanations of the columns

In the Transactions Table of the multi-currency accounting, other than the columns of the double-entry accounting, there are the following extra columns:

• Currency amount
  This is the amount of the currency specified in the column with the currency symbol.
  This amount is used by the program to update the balance of the related account in currency. 
• Currency
  This is the currency symbol of the currency to which the amount refers.
  The currency symbol has to be the one of the basic currency, specified in the File and accounting properties (File menu), or the currency symbol of an amount indicated in the Debit A/C or Credit A/C columns.
  You can also use a different currency as long as the indicated Debit A/C and the Credit A/C are basic currency accounts.
  In this case the amount in currency is used as a reference, but will not be used for accounting purposes
• Exchange rate
  Used to convert the foreign currency amount in its basic currency equivalent.
• Amount in Basic currency
  The transaction amount, expressed in basic currency.
  This amount is used by the program to update the balance of the related account in basic currency.
• Exchange rate multiplier
  Normally not visible in the view, this value is multiplied by the exchange rate.

Useful advice

• While being positioned on the Currency Amount column and pressing the F6 key, the program rewrites all values with the earlier explained logic, as if there were no values present. This feature is useful when the Debit A/C or the Credit A/C is modified.
• If there is a registration with a single account in basis currency (in 'Multiple transactions' - see Transaction types) and its value of the Currency column has been changed manually in a currency symbol of a foreign currency, it is necessary to be positioned on the cell of the Currency column and press the F6 key in order to update the exchange rate and calculate the amount in basic currency.
• Smart fill for the Exchange rate column
  The program suggests several exchange rates, picking them up from the Exchange rates table or from exchange rates previously used in the transactions.

Types of transactions in multi-currency accounting

All amounts, whether in basic currency or foreign currency must always be entered in the Currency Amount column.

As regards the exchange rates, multiplier and historical exchange rates, please refer to the Exchange rates table page.

Attention: in the transaction examples, the basic currency is the Euro.

For each transaction, there are two accounts (debit account and credit account). In the program, only one foreign currency per transaction row can be used. So there can be the following direct combinations:

• Entries between two accounts in basic currency with the amount in basic currency (in the image, transactions n.1 in the Doc column). The account currency is the basic currency.
• Entries between two accounts in basic currency with the amount in foreign currency (Doc 2)
  The indicated accounts are in basic currency, but the currency symbol and the amount in currency, indicated in the transaction row, are not in basic currency, but in a different currency.
  To insert the different currency, the user has to manually change the currency symbol.

  This is being used when one goes abroad and money is being exchanged in order to pay in local currency. In this case we do not have a specific account.

  For the calculation of the balance (both accounts being in basic currency) only the amount of basic currency column is being used.
• Entries between an account in foreign currency and one in basic currency  (Doc 3)
  The currency needs to be the one of the account in foreign currency.
  For the calculation of the balance of the account in foreign currency, the program uses the amount in foreign currency and for the balance in basic currency, the program uses the amount in basic currency.
• Entries between two accounts with the same foreign currency (Doc 4)
  The currency needs to be the same as the account currency of both accounts (USD1 and USD2). In order to update the exchange rate and calculate the amount in basic currency, it is necessary to be positioned on the cell of the Currency column and press the F6 key.
• Entries with two accounts in different foreign currencies (Doc 5)
  For example, the bank makes an exchange operation between two foreign currencies:
  In this case, the transaction needs to be recorded on two rows.
  The amount in basic currency needs to be the same. It is useful to use an amount close to the current exchange rate to avoid excessive exchange rate differences.
  In order for the amounts in basic currency to be equal, the amount in basic currency needs to be indicated manually, and the program will calculate the exchange rate. 
• Exchange rate differences (Doc 6)
  The goal of this transaction is to realign the balance of the basic currency account with the equivalent of the Foreign currency account at today's exchange rate.
  On the Foreign currency account, only the amount in basic currency related to the exchange rate differences is being recorded.
  They are automatically generated with the Create transaction for exchange rate variation command.
  • For the exchange rate profits, the program automatically indicates the account to be revaluated in debit and the exchange rate profit account in credit. The exchange rate profit account is indicated in the File and Accounting properties (Basic Data), or in the specified account -> Exchange rate differences account column of the Other view (intended for one or several specific accounts).
  • For the exchange rate losses, the program automatically indicates the account to be revaluated in credit and the exchange rate loss account in debit. The exchange rate loss account is indicated in the File and Accounting properties (Basic Data), or in the specified account -> Exchange rate differences account column of the Other view (intended for one or several specific accounts).
  • The Currency amount is being left empty
  • The Currency symbol is the basic currency
  • In the Basic currency amount column, the amount of the revaluation of the account (profit or loss) is being indicated.

 Establishing the exchange rate

The accountant is the one who decides which exchange rate to use for each single operation. Generally, the following rules are being applied:

• For normal operations, the exchange rate of the day is being used
• For buying or selling currency, the values indicated by a money exchange office or a bank are being used.
  First the amount in foreign currency is being indicated in the program and then the amount in basic currency. The program calculates the exchange rate. The exchange rate indicated by the bank can be slightly different, because banks specify exchange rates with few figures after the decimal point and often round the amounts.
• When several operations with the same exchange rate are being recorded, it is useful to update the exchange rate in the Exchange rates table, so that the program can automatically apply it.
• For operations from abroad that are subject to VAT, the national authority might impose a standard exchange rate. In this case, that exchange rate should be inserted in the Exchange rate column of the transaction
• To purchase real estate or equity investments, an historical exchange rate is being used. In that case, a currency symbol needs to be created in the Exchange rates table (for example USD1) with an historical exchange rate, that is not being subject to the fluctuations of the exchange rate.
  One can create as many currency symbols as desired for all historical exchange rates.

 Transactions with VAT

The VAT account and the account from which the VAT is being deducted have to be in basic currency. It is impossible to use a VAT code to deduct the VAT from a foreign currency account. In order to record operations with VAT that have accounts in foreign currency as their counterpart, two transaction rows have to be used:

• First, the amount of the purchase is being recorded on an Internal transfers account in basic currency and the related VAT code is being applied. The amount in basic currency has to be calculated using an exchange rate in accordance with the requirements of the Tax administration.
• In a second row, the balance of the Internal transfers account is being put to zero; as its counterpart, the account in foreign currency should be entered.
  The amount used for this transaction, both in basic currency and in foreign currency, has to be excluding VAT. Obviously, the exchange rate that has to be used is the same one as the one being used in the preceding transaction.

In the example, the basic currency is the EUR. We are dealing with a national purchase, but paid from a foreign currency account (USD).

 VAT and foreign currency transactions

In transactions with foreign currency accounts, it is possible to record VAT with a gross amount (Amount type 0, with VAT).
If you enter net values (Amount type 1, without VAT), the program indicates an error, because the calculation of the gross value would in many cases be incorrect due to the rounding up of VAT and of the exchange rate.
In these cases it is advisable to enter the gross value. See also the Explanations of the error.

Automatism while entering multi-currency transactions

When a new transaction is being entered, the data in the above mentioned columns have to be completed.

When some values of the transaction row are modified, the program completes the transaction with the predefined values. If these values do not satisfy the user's requirements, these have to be modified in the transaction row.

The modification of the values in the Exchange rates table have no effect on already entered transaction rows. Thus, when the exchange rate in the Exchange rates table is modified, this has no influence whatsoever on already inserted transactions.

• When the amount in currency is entered and there is either a Debit A/C or a Credit A/C, and no other values are entered, the program operates as follows:
  • the currency symbol is retrieved from the account in use, giving priority to the account that is not in basic currency;
  • the exchange rate, defined in the Exchange rates table, is applied with the following logic:
    • the historical exchange rate is applied, with a date earlier or equal to the transaction date
    • tf there is no historical exchange rate to be found, the exchange rate from the row without date is applied.
  • the multiplier, defined in the Exchange rates table, is applied or the number 1 if it is the basic currency;
  • the amount in basic currency is calculated.
• When the amount in currency is modified (and there are already other values present), the program operates as follows:
  • the amount in basic currency is calculated with the existing exchange rate
• If the currency symbol is modified the program operates as follows:
  • the exchange rate with the multiplier is applied and the amount in basic currency is calculated (like above)
• If the exchange rate is modified the program operates as follows:
  • the amount in basic currency is calculated using the entered exchange rate
• When the amount in basic currency is modified the program operates as follows:
  • the exchange rate is recalculated.

Info window

In the info window, the program indicates:

• Differences, if any, between the Debit and Credit total movements in basic currency
• Explanation on the different uses of the F6 key

For the accounts related to the transaction row on which one is positioned, the program always indicates in the Info windows:

• the account number
• the account description
• the transaction's amount in basic currency
• the current account balance in basic currency
• the account currency symbol
• the transaction's amount in the account currency (if different from the basic currency)
• the current account balance in currency (if different from the basic currency)

Transactions for opening balances

For multi-currency accounting, when entering the opening balances in the Accounts table, the program converts the amounts into basic currency, using the opening exchange rate defined in the Exchange rates table, Opening exchange rate column.
To use historical exchange rates as opening balances, you can create another currency symbol or create transactions in the Transactions table with the opening balances. This way you can use different exchange rates for different accounts.

• Enter a single transaction for each account with an opening balance (Assets and Liabilities), indicating the initial accounting date and the Debit or Credit account.
• In the DocType column enter the "01" value to indicate that it is an opening value.
  • In the Banana Accounting reports or printouts this amount will be shown as opening balance.
  • However the transaction doesn't update the Opening balance column in the Accounts table

When using opening transactions, please consider that:

• In order to avoid the revaluation of the accounts with the current exchange rate, in the Accounts table, enter the "0;0" value in Exchange rate difference account column
• The software allows you to add both some opening balances in the Accounts table and some opening transactions in the Transactions table (Assets and Liabilities).
  In both cases the amounts are considered in the calculations and, if it is the same account, they are added together.
  We do not recommend using the two methods simultaneously to avoid hard-to-find errors and differences.
• Opening transactions must be entered manually.
  Any debit and credit differences are shown as a transaction difference.

Data transfer from earlier versions

In version 4 or earlier, the absence of a currency symbol in the Transactions table was being interpreted as a transaction in basic currency.
In version 7 and in version 8, each transaction needs to have its own currency symbol. Therefore, when you update from version 4 to version 7 or 8, in the accounting file, the transactions without a currency symbol need to be completed. To do this, a new Currency column must be added to the Transactions table by executing the Columns setup command from the Data menu.