Overview of Multi-Currency Accounting

Overview of Multi-Currency Accounting

   To set up multi-currency accounting:

1. Define the conversion rate types you want to use to maintain daily exchange rates and to enter foreign currency journals. General Ledger comes with four predefined conversion rate types: Spot, Corporate, User, and EMU Fixed. See: Defining Conversion Rate Types.

2. Define and enable the currencies you want to use. General Ledger predefines all ISO currencies, but you can define as many additional currencies as you need. See: Defining Currencies.

3. Assign a functional currency to your set of books. General Ledger records all transactions and maintains all of your account balances in the functional currency. See: Defining Sets of Books.

4. If you use Multiple Reporting Currencies, assign reporting currencies to your reporting sets of books. See: Multiple Reporting Currencies Overview.

5. Define a Cumulative Translation Adjustment account for your set of books. Set the account type of your Cumulative Translation Adjustment account to:

• Owner's Equity: to create a translation adjustment on your balance sheet.

• Revenue or Expense: to create a translation gain/loss on your income statement.

General Ledger automatically posts any net adjustments resulting from currency translation to this account in accordance with SFAS #52 (U.S.).

6. Define an account to use to record unrealized gains and losses that arise when you revalue account balances that are denominated in a foreign currency. See: Defining Accounts and Revaluing Balances.

7. Enter the daily rates you will need. Typically, you will enter rates to convert foreign currency journal entries into your functional and reporting currencies. See: Entering Daily Rates.

If you do not want to predefine daily rates, you can use the conversion rate type User to enter daily rates at the time you enter journals.

Note: If you have average balance processing enabled in your set of books, you must define a daily rate on or before the first day of the first year for which you want to translate balances.

8. Enter period rates for running foreign currency revaluation or translation. See: Entering Period Rates.

9. Enter historical rates or amounts to translate balances in your owner's equity accounts in accordance with SFAS #52 (U.S.). General Ledger also uses historical rates and amounts to remeasure selected account balances for companies in highly inflationary economies. See: Entering Historical Rates.

   To work with multiple currencies in General Ledger:

1. Update your daily conversion rates regularly.

2. Enter or import foreign currency journals. If you use the conversion rate type User, enter the currency conversion rate when you enter journals. See: Entering Foreign Currency Journals.

3. Post your foreign currency journal entries to an open period. General Ledger stores the foreign currency amount associated with each journal line, in addition to the converted functional currency equivalent. See: Posting Journal Batches.

4. Revalue asset and liability accounts whose balances are denominated in a foreign currency. General Ledger creates a journal entry to adjust the balances for exchange rate fluctuations in accordance with SFAS #52 (U.S.). Note that General Ledger creates the revaluation adjustments in your functional currency. See: Revaluing Balances.

5. Post the revaluation journal batch to adjust your unrealized gain/loss account for exchange rate fluctuations. See: Posting Journals.

6. Translate account balances before consolidating sets of books with different functional currencies, or to report account balances in an alternate currency. You can translate actual or budget balances. See: Translating Balances.

Note: If you use Multiple Reporting Currencies, you can report account balances in an alternate currency directly from your reporting sets of books. See: Multiple Reporting Currencies Overview.

7. Review entered and converted foreign currency balances online using the Account Inquiry window. You can also review translated amounts online using the Account Inquiry window. See: Performing an Account Inquiry.

Note: You must have previously translated your account balances to the foreign currency before you perform the translated account balance inquiry.

8. Run foreign currency Trial Balance reports. Use the:

• Detail, Summary1, Summary2, or Translation Trial Balances to view translated account balances after you run translation.

• Foreign Currency Detail, Foreign Currency Summary1, or Summary2 Trial Balances to view balances entered in a foreign currency.

• Foreign Currency General Ledger Report to reconcile revaluation journals after you run revaluation.

See: Running Standard Reports and Listings.

9. Produce foreign currency financial statements. Use the Financial Statement Generator to build custom reports to report on actual and budget translated account balances, as well as amounts entered in foreign currency. See: Overview of Financial Statement Generator.