Creating accounts to track your foreign-currency transactions

Multicurrency Overview > Setting up Multicurrency > Creating accounts to track your foreign-currency transactions

In order to track transactions in a foreign currency properly, you must create a number of accounts that are set up to use that currency, rather than U.S. dollars. Later in the setup process, you'll enter these accounts as the linked accounts for transactions recorded using this currency. You cannot simply use the same accounts you use for your local currency transactions, because the currencies rarely trade at par with one another. (That is, one unit rarely buys exactly one monetary unit in any other currency.)

For information about creating accounts, see Choose the type of account you want. Before you begin, though, review If you make foreign sales and If you make foreign purchases to gain a better understanding of the accounts you'll need to add.

Multicurrency Overview - Creating accounts to track foreign-currency transactions

If you make foreign sales

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

The account you use to track receivables must use the currency of the transactions it will be tracking. The account(s) you use to track tax collected and paid must use the local currency. Other accounts used to track foreign-currency sales transactions can be assigned either the foreign currency or U.S. dollars. In fact, with the exception of the receivables account, you can use the same accounts that you use to track sales transactions to U.S. customers.

Using separate accounts for each currency will allow you to see more quickly where deposits and the like originated, but if that's not important to you, you may want to use the same accounts for all your sales.

  • Asset account for tracking receivables (for instance, "Accounts Receivable - Mexico") This account must be assigned the foreign currency, not U.S. dollars.

  • Checking account where customer receipts in the foreign currency will be deposited. This can be a U.S. funds account if your bank accepts deposits in other currencies.

  • 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 U.S. dollars.

  • Liability account for sales tax collected (if you're required to collect sales tax on foreign sales). This account must be assigned the local currency.

Note: Only receipt transactions which are local currency may be grouped as a deposit of undeposited funds

 Only receipt transactions which are U.S. currency may be grouped as a deposit of undeposited funds. Also, you may only use a U.S. currency account as the linked account for undeposited funds.
If you make foreign purchases

Here's a list of the accounts you're likely to need if you make payments to vendors in a foreign currency:

The account you use to track payables must use the currency of the transactions it will be tracking. The account(s) you use to track tax collected and paid must use the local currency. Other accounts used to track foreign-currency purchase transactions can be assigned either the foreign currency or U.S. dollars. In fact, with the exception of the payables account, you can use the same accounts that you use to track purchases from U.S. vendors.

Using separate accounts for each currency will allow you to see more quickly where deposits and the like originated, but if that's not important to you, you may want to use the same accounts for all your purchases.

  • Liability account for tracking payables (for instance, "Accounts Payable - Mexico"). This account must be assigned the foreign currency, not U.S. dollars.

  • Checking account that will be used to pay debts in a foreign currency. This can be a U.S. funds account if your bank writes checks for you in other currencies.

  • Asset account for deposits paid (if you make deposits on orders). This account can be assigned the currency code for either the foreign currency or U.S. dollars.

  • Liability account for import duties collected (if you're required to pay duty on goods you import). This account can be assigned the currency code for either the foreign currency or U.S. dollars.

  • Liability account for sales tax paid (if you're required to pay sales tax on foreign purchases). This account must be assigned the local currency.