Understanding exchange accounts
Multicurrency Overview > What is Multicurrency? > Understanding exchange accountsFor every foreign-currency account you create, there also must be a companion exchange account to track the effects that changes in the exchange rate have on the foreign-currency account. This is known as a "dual-account" approach to multicurrency. Each foreign-currency account must have its own exchange account -- the same exchange account can't be used for multiple foreign-currency accounts. MYOB AccountEdge will create an exchange account for you each time you create a foreign-currency account, if you like, or you can specify an exchange account you've already created.
Although exchange accounts use the U.S. dollar as their currency, it may be helpful to think of the amounts in these accounts as generic units of money, rather than a specific currency.
For example, assume you've deposited 100 pounds in your British bank account. If the exchange rate is 1.677, your 100 pounds is worth USD$167.78. Your "British Bank" account in MYOB AccountEdge will show a debit balance of 100 pounds, and your "British Bank Exchange" account will show a balance of USD$67.78. The number of monetary units in the two accounts is 167.78 -- which is the value of the account in United States dollars.
You'll seldom need to make entries in an exchange account-these accounts are updated automatically when you record sales and purchases and spend and receive money. You will need to enter a beginning balance for each of your exchange accounts if the foreign-currency accounts associated with them has a balance. You'll also update the exchange accounts each month when you record unrealized gains and losses. (These are the potential amounts by which the balances of your accounts have changed as a result of exchange rate fluctuations. For more information about unrealized gains and losses see Recording unrealized gains and losses.)
Multicurrency Overview - Understanding exchange rates