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Level 1

Exchange rate on balance sheet

My currency is LKR but I have a USD account. When I look at my balance sheet as at today, the USD account's value is incorrect. The correct value should be based on the exchange rate TODAY. But it is showing an older exchange rate. How does QB handle different currency accounts on the balance sheet?

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Level 10

Exchange rate on balance sheet

The exchange rate is locked in on the day of each transaction. This is correct from an accounting point of view based on the principle of valuing assets at cost (or really the lower of cost or market value).  If you want to revalue the asset to an exchange rate on another day, say a report date, the end of the month or year, then there is a tool to create an entry, to a P&L account for Exchange Gains or Losses, on a specific date. Go to Gear>All Lists>Currencies and click the drop down on the right of the currency, and select Revalue. Enter the date, confirm the rate and accounts, and click Revalue and Save

Level 1

Exchange rate on balance sheet

Hey,

 

Thanks for the reply. I actually have tried that but when I do that, my P&L gets completely thrown off showing a large exchange gain in the last 3 months.  I can't figure out why.  If I revalue the currency, the balance sheet displays correctly, but the P&L is incorrect. If I don't revalue it, the P&L is mostly correct but the balance sheet is technically not showing the correct numbers. Shouldn't the balancesheet account for exchange rate gains (or losses)?

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Level 1

Exchange rate on balance sheet

Hey,

 

Thanks for getting back.  I have actually tried doing that but it results in a large exchange rate gain that shows up on the P&L over the last 3 months. I can't figure out why. If I don't revalue the currency, my P&L is mostly correct. If I revalue it, my P&L is incorrect but my balance sheet is correct. Shouldn't the balance sheet reflect exchange rate gains (or losses)?

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QuickBooks Team

Exchange rate on balance sheet

Hello there, @babam.

 

I'm here to provide more insights about the exchange rates when using the Home Currency Adjustments.

 

Normally, all those adjustments affect your balance sheet accounts and profit and loss. Your reports show the home currency value based on the exchange rates you used at the time of each transaction.

 

You can enter a home currency adjustment when you need your financial reports to show a current home currency value of your foreign balances.

 

Gain or loss is an expense account and will be shown only on the P&L report and not on the Balance Sheet. What's on the Balance Sheet is the asset, liability, and equity.

 

QuickBooks calculates the gain and loss according to the exchange rate field in the customer invoice. For example, when we record an invoice with a rate of 1:1.5 and subsequently, then we record the payment at 1:2.0, there will be an exchange gain or loss based on the difference in exchange rate.

 

You can run the Balance Sheet and P&L to check the Net Income if it matches the calculation.

 

That should be enough information to answer your question. Don't hesitate to add a comment if there's anything else you need. Have a good day ahead.

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Level 1

Exchange rate on balance sheet

Same question here. Shouldn't the exchange gain or loss on translation of cash and cash equivalent balances be separate from the exchange gain or loss on transactions? currently, my QBO uses only one account for  both

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QuickBooks Team

Exchange rate on balance sheet

Hello Karmi, 

 

Yes, QuickBooks will only use one account that sums up your exchange rate's gain or loss. 

 

For more details about exchange rates, you can check out these articles: 

Drop by the Community if you need anything else. 

 

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Level 1

Exchange rate on balance sheet

Thank you for your reply.

 

Based on the results of our currency revaluation. The cash balance forex translation goes to "Exchange gain or loss" while other balance sheet accounts forex translation goes to "Unrealized gain or loss". Shouldn't the cash translation be in the "unrealized gain or loss" as well? so that we can choose not to "show unrealized gain or loss" and make profit and loss presentation correct.

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QuickBooks Team

Exchange rate on balance sheet

Good day, Karmi.

 

The cash transactions will show in the unrealized gain or loss once they have been completed. Which means, the money should be collected or paid first. 

 

You can check the articles my colleague, Catherine_B, provided at the top for more information.

 

Let us know if you have other questions. We'd be pleased to answer them.

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Level 1

Exchange rate on balance sheet

Why can't the gain or loss account be an other income account type instead of an expense account? If it is already an expense account can it be changed?

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QuickBooks Team

Exchange rate on balance sheet

Good morning, @Romain876.

 

I'm happy to give the steps on how to change the account type.

 

To change the account type of the accounts, start with the sub-accounts. Once you have changed all of them, change the parent account.

  1. Go to Settings ⚙.
  2. Choose Chart of Accounts.
  3. Locate the first sub-account to change.
  4. From the Action column drop-down menu, select Edit.
  5. In the Account dialog, clear the Is sub-account checkbox.
  6. Click the new Account Type from the drop-down menu.
  7. Select the appropriate Detail Type from the drop-down list.
  8. Pick Save and Close. You are prompted that changing the Account Type may affect your accounting and reporting.
  9. Select Yes in the prompt to change the account.

To determine how to categorize the account, the best fit for you and the account would be to touch base with an accounting professional.

 

We also offer QuickBooks Live, which is a bookkeeping service offered by QuickBooks if you do not currently have an accountant.

 

If you run into any issues feel free to reach out, I'm only a reply away.

 

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