Set Up Currencies
You must set up a code for each currency you use if you:
Buy or sell in other currencies besides your local currency (LCY).
Record general ledger transactions in both LCY and an additional reporting currency.
After setting up the codes, assign the appropriate code to each foreign currency bank account, and assign a default currency code to foreign customer and vendor accounts.
To manage currencies that do not use decimals and to avoid unnecessary decimals in foreign currency, you can use two different rounding features:
These features can operate independently or in combination. In addition, the features can operate in connection with invoice rounding.
As opposed to the invoice rounding features, the amount rounding and unit-amount rounding features affect only amounts in foreign currency-not the corresponding amounts in LCY. These two features will not result in any postings to general ledger accounts. Consequently, no general ledger account needs to be specified on posting groups or elsewhere.
The unit-amount rounding feature controls how sales prices for items and resources in foreign currencies are rounded on sales and purchase lines. You must specify the rules for each currency separately, in the Unit-Amount Rounding Precision field in the Currencies window.
The unit-amount rounding feature is used automatically every time you enter an item or resource number on a sales line. If the invoice is for a customer with a currency code, the item or resource price is converted into the customer's currency. The price is rounded according to the unit-amount rounding precision for the currency.
The amount rounding feature controls how amounts in foreign currencies are rounded on general journal lines, sales lines, and purchase lines. You must specify the rules for each currency separately, in the Amount Rounding Precision field in the Currencies window.
Amounts in foreign currencies are rounded when you fill in and post general journal lines, sales lines, and purchase lines.
You can register exchange rates for each foreign currency and specify from which dates the exchange rates are valid. For example, you can enter daily exchange rates, monthly exchange rates, or quarterly exchange rates for each foreign currency.
You can retain historical exchange rates in the Currency Exchange Rates window for reference purposes. When you need to update exchange rates, you can register the new exchange rate on a new line in the Currency Exchange Rates window.
General Ledger Accounts
You cannot link currency codes to general ledger accounts because amounts on general ledger accounts are in LCY. If you have a bank loan in USD and place deposits in a bank account in SEK, you can keep track of these accounts by setting up bank accounts in USD and SEK. With posting groups, you can link the accounts to the relevant general ledger accounts. In the general ledger, the value of the amounts is shown in LCY.
You can enter a currency code on a general journal line and post the line to a general ledger account. The relevant exchange rate is used to convert the amount to LCY before it is posted to the general ledger account.
Additional Reporting Currency
If you set up an additional reporting currency, all transactions that you post to the general ledger will be recorded in both LCY and the additional reporting currency. This allows you to make financial statements and print reports in LCY and a second currency. The additional reporting currency can be used to present the financial statement as if the company kept its books in that currency.
The following table describes a sequence of tasks, with links to the topics that describe them. These tasks are listed in the order in which they are generally performed.
Set up currency codes.
Enter exchange rates for foreign currencies.
Learn about recording all entries in both LCY and a second currency.
Set up an additional reporting currency.