Task 3: Create accounts to track foreign-currency transactions

In order to correctly track transactions in a foreign currency, you must create a number of accounts that are set up to use that currency rather than pounds. You cannot simply use the same accounts you use for your pound transactions because the pound and other currencies rarely trade at par with one another (that is, one pound rarely buys exactly one monetary unit in any other currency).

note : Foreign-currency accounts are automatically linked

For every foreign-currency account you create, AccountEdge Plus will automatically create a linked exchange account. For example, if you create a yen bank account, a yen exchange account will be created automatically. AccountEdgePlus uses these dual accounts so that both the foreign currency amount and the local currency equivalent of a transaction can be viewed in your Balance Sheet.

You can let AccountEdge Plus create the linked exchange account for you or you can specify one yourself. To create an account yourself, see Set up accounts. You will need to select the correct currency and exchange account in the Account Information window.

Before you create an account, we suggest you review the following sections to get an understanding of the accounts you need to create.

If you make foreign sales

Here’s a list of the accounts you are likely to need if you accept payment from customers in a foreign currency.

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Asset account for tracking debtors (for instance, ‘Debtors Accounts Euro’). This account must be assigned the foreign currency and not the British pound.

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Bank account where customer receipts in the foreign currency will be deposited. This can be a Sterling funds account if your bank accepts deposits in other currencies.

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Liability account for deposits received (if you allow customers to make deposits on orders). This account can be assigned the currency code for either the foreign currency or the British pound.

note : Grouping with undeposited funds

Only receipt transactions that are in Sterling currency may be grouped as a deposit of undeposited funds. Also, you may only use a Sterling currency account as the linked account for undeposited funds.

If you make foreign purchases