How to record a foreign currency transaction in bookkeeping

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HowNow
Posts: 8
Joined: Sat Jun 13, 2009 12:11 am

How to record a foreign currency transaction in bookkeeping

Post by HowNow » Thu Feb 11, 2010 6:19 am

Foreign currency journal entries. How to record a foreign currency transaction in bookkeeping?

Creinin
Posts: 21
Joined: Fri Jul 03, 2009 9:25 pm

Re: How to record a foreign currency transaction in bookkeeping

Post by Creinin » Thu Mar 11, 2010 4:59 pm

If you buy goods or services in currency that is different from your functional currency, you need to input data using exchange rates. For example invoice USD $1000. Exchange rate is 1.09148. Accounting Entry - debit purchases and credit accounts payable AU $1091.48 ( 1000*1.09148)

klllmmm
Posts: 1
Joined: Mon Apr 05, 2010 1:30 am

Re: How to record a foreign currency transaction in bookkeeping

Post by klllmmm » Mon Apr 05, 2010 1:44 am

If we are paying such a payable through our funds in foreign currency bank a/c (eg. TT or Bank draft), what exchange rate i should use to record the transaction in my reporting?
As your eg. invoice USD $1000.
Spot exchange rates Buying- 1.09148 Selling- 1.12148

Can i use bank selling rate to convert as if i were to buy the dollars from the bank?

Creinin
Posts: 21
Joined: Fri Jul 03, 2009 9:25 pm

Re: How to record a foreign currency transaction in bookkeeping

Post by Creinin » Tue Apr 06, 2010 12:12 pm

In order to convert the amount you can use exchange rate at the time of a transaction or average rate for that date. For average rates - you need to use historical rates data - daily foreign exchange rates.

devondad93
Posts: 1
Joined: Tue Jul 06, 2010 1:37 pm

Re: How to record a foreign currency transaction in bookkeeping

Post by devondad93 » Tue Jul 06, 2010 1:53 pm

As a bookkeeper, I have recorded a lot of currency transaction. Remember that all transactions in currencies other than the functional currency are treated as transactions in foreign currencies. It is possible that the carrying value for an item will have been determined by a comparison of two amounts that have been measured at different dates.

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