Currency Gain/Loss

As we have just seen, a movement in the exchange rate will normally produce some sort of currency gain or loss. In the previous example, what we paid $100 for is now worth $107.14. The good news is that we have made a “profit” of $7.14; the bad news is that in many jurisdictions this may be taxable (which is why you need accounting advice for this sort of stuff).

MoneyWorks recognizes two types of currency gain/loss: invoices in a foreign currency result in an “Unrealised Gain/Loss”; cash (bank accounts) result in a “Realised Gain/Loss”. The GL accounts to accumulate these are nominated as part of the currency setup, and are always in the local currency. You can specify different gain/loss GL accounts per currency if you want to track these by currency. You can also have the same GL account for Realised and Unrealised gains/losses, which will remove the distinction between them.

A currency gain/loss is recorded in MoneyWorks in two circumstances:

  • when the currency rate is altered. This is recorded as a journal;
  • when a transaction is posted that has an exchange rate that is different from the system exchange rate. This is recorded as additional lines in the transaction, and can be seen by printing the transaction using the Print Details toolbar button.

To see the realised or unrealised gain/losses for prior period, use the Account Enquiry.