For a couple of weeks now, we have been covering multicurrency in QuickBooks Online (QBO). We have reviewed the setup of the feature, which has only recently become available. We have setup a multicurrency customer and processed accounts receivable transactions. We have also created and used in transactions, a foreign currency vendor.
The nature of business for some companies will cause them to use this feature frequently. When this is the case, they may want a certain amount of monitoring. Especially if currencies they use fluctuate quite a bit.
How much has the value of our receivables changed? Is the amount of home currency needed to satisfy our payables increasing or decreasing?
In our earlier posts on multicurrency, we saw the changes in exchange rates post to our QBO reports. Whatever difference needed to be recorded when a customer invoice was paid would be posted by QBO to an account called Exchange Gain or Loss.
That posting only happens with a transaction. A payment is made paying an invoice. The difference in dollar value from the date the invoice was created to the date it was paid is recorded by QBO.
What about invoices that have not been paid? How much has their value changed in our home currency, in this case, the U.S dollar?
Navigate to Reports->All Reports->Business Overview. Select the report Unrealized Exchange Gains and Losses. The following popup appears.
This popup window allows editing of certain currency exchange rates. Editing the exchange rates may be necessary from time to time, but should not be done without a clear understanding of what is being accomplished.
Click Continue without changing any of the rates.
The resulting report shows us how exchange rate changes are affecting our payables and receivables.
Look at the accounts receivable line. Our sample file only has one invoice in that line. The value of that invoice has fallen by $58.80.
The report shows us the Unrealized gains and losses. These haven’t occurred yet, but will were the invoice to be paid at this time. Then the gain or loss would become Realized, and QBO would post the entry to the account Exchange Gains and Losses.
For more advanced users, the information in this report could be used to make adjustments to financial statements to account for receivables and payables at a more current value in the home currency. For most users, this report allows them to see what effect currency fluctuations are having on their foreign transactions.
Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
12401 Orange Drive #136
Davie, FL 33330