Drew E is completely right from what I can tell. I am running into the very same problem, and it seems extremely basic. It also seems like QBO is taking the wrong approach when creating Balance Sheets on Multicurrency accounts.
I am paying extra for "multicurrency" option on my QBO account. My "home" currency is US$, but I have an "other asset" (deferred expense) account is in Euros, and it represents a true Euro bank account where the money is kept in Euros and spent in euros.
The balance sheet treats my "other asset" account account as a US$ account (though confusingly, as it does not label currency), and for every transaction it converts the transaction amount from euros to dollars using the day's currency conversion rate. It then adds or subtracts that calculated dollar rate from the last dollar balance at the time of the previous transaction. However, this leads to the dollar balance drifting away, for away, from the true euro balance.
This particular "current asset" account is a euro account and the euro balance is the true one, not the dollar equivalent on any given day. So for any given day it should calculate the dollar balance on the balance sheet based on the current euro value, it should not string along and add up the historical dollar values on each date that a transaction occurred (as it appears to be doing), that leads to a huge drift away from the actual true euro balance. For example on 12/31/19 the balance sheet is showing me a balance of $-2,824.20. But the actual Euro balance, which thank god we can still see in the register, is €-3,928.99. With each transaction between 1/1/18 (when I started) and 12/31/19, the running count of the US$ balance drifts farther and farther away from reality. So much so that the "balance sheet" value eventually becomes completely meaningless. For example I genuinely have €-3,928.99 in the account on 12/31/19 (counting the actual euros that have really come and gone during many transactions over the months) — but, on 12/31/19 €-3,929.99 (the actual value of my euro bank account) is worth US$-4,419.32 (when the conversion rate was 1.1248). This is very different that my QB balance sheet value of US$-2,824.20. It's an utterly worthless value not even in the ballpark (off by 37%, not exactly precise accounting).
Multicurrency accounts need to have multi-currency balance sheets that reflect the true balance of the non-home-currency accounts and all accounts need to be clearly marked as US$ or € or £ or whatever is the currency of those accounts. That is the true reality. Showing all accounts in the estimated "home currency" value based on a currency conversion rate (chosen by the user or the bank rate of the last day or the time period considered) should be a secondary option that can be chosen by the user.
But, even if the user does want to exercise that option — the way QBO is currently, totally unclearly, calculating the home currency value on that end date of the report (by taking the cumulative value of all the estimated home currency transaction values on the date of those transactions — plus the home currency starting balance estimate on the starting date, each transaction date with it's own conversion rate based on the bank rate of the day — it's like the bookkeeping version of a game of telephone) appears to me to be the wrong method, misleading and dangerous and will cause thousands of us to waste thousands of hours trying to figure out what on earth is going on when they look at the balance sheet at the year end.
Am I right or am I totally missing something?
PS (The QB method assumes that the entire account balance is ACTUALLY getting converted to the home currency with each transaction, and that's simply not true — it's hard for me to imagine a scenario where that is true — if that was true you might as well not have a multi currency account and stick with a home currency completely.)
