Create accounts to track foreign-currency transactions

International transactions > Setting up multiple currencies > Task 3: Create accounts to track foreign-currency transactions

Task 3: Create accounts to track foreign-currency transactions

To track transactions in a foreign currency, you must create a number of accounts that use that currency rather than Australian dollars. You cannot use the same accounts that you use for your local currency transactions because your currency and other currencies will rarely trade at par with one another (that is, one Australian dollar rarely buys exactly one monetary unit in any other currency).

note : Accounts that can be assigned foreign currency

Only balance sheet accounts—asset, liability and equity accounts—can be assigned a foreign currency. All other types of accounts are tracked using Australian dollars.

For every foreign currency account you create, your AccountEdge software needs a linked exchange account. For example, if you create a yen cheque account, it must be linked to a yen exchange account. Together, these accounts allow the foreign currency amount and the local currency equivalent to be viewed in your balance sheet.

When you create a foreign-currency account, you can let your AccountEdge software create the linked exchange account, or you can specify one yourself.

The following section describes the accounts you need to create.

If you make foreign sales

Following is a list of accounts you are likely to need if you accept payment from customers in a foreign currency:

■	Asset account for tracking receivables (for instance, ‘Receivables Account Euro’). This account must be assigned the foreign currency and not your local currency.

■	Bank account where customer receipts in the foreign currency will be deposited. This can be your local currency account if your bank accepts deposits in other currencies.

■	Liability account for deposits received (if you allow customers to make deposits on orders). This account can be assigned the currency code for either the foreign currency or your local currency.

note : Grouping with undeposited funds

Only receipt transactions that are in your local currency may be grouped as undeposited funds. Therefore, you can only use your Australian dollar currency account as the linked account for undeposited funds.

If you make foreign purchases

Following is a list of accounts you are likely to need if you make payments to suppliers in a foreign currency:

■	Liability account for tracking payables (for instance, ‘Payables Accounts Euro’). This account must be assigned the foreign currency and not your local currency.

■	Bank account that will be used to pay debts in a foreign currency. This can be your local currency account if your bank writes cheques for you in other currencies.

■	Asset account for deposits paid (if you make deposits on orders). This account can be assigned the currency code of either the foreign currency or your local currency.

■	Liability account for import duties collected (if you are required to pay duty on goods). This account can be assigned the currency code for either the foreign currency or your local currency.

If you track unrealised gains and losses

If you plan to track unrealised gains and losses, you need to create an income account for this purpose. You may want to name it ‘Unrealised Currency Gain/Loss’ or something similar. We recommend you ask your accountant whether your business needs to track unrealised gains and losses and, if it does, the most appropriate way for it to do so. See ‘Tracking currency gains and losses’ for more information.

Additional accounts

Depending on your business, you may need to create additional accounts to track foreign bank accounts, assets held overseas and the like. If you are unsure about these accounts, ask your accountant or an Certified Consultant.

■	Task 4: Assign accounts to foreign currencies

■	Tracking currency gains and losses

More help options

Top of page