Exchange Gain and Loss on Rounding Difference

MM_7769277

Good morning all!

I finally managed to get my NZ GST codes working, thanks to the help line.

The problem is, now all my NZD transactions are now appearing in the P&L as Exchange Gain/Loss.

How do I fix this??

John G

Hi MM,

Are you using an NZ RA Hosted or an Australian RA Hosted?


regards,
John

MM_7769277

Hi John,

Australian RA hosted.

Thanks
MM

John G

Thanks MM,

That's right, you'll get entries to the Exchange Gain/Loss Account when you issue Invoices and Receive Bills in a foreign currency.  The Exchange Gain/Loss recognises the difference in the exchange rate used on the original Invoice/Bill and the exchange rate used on the payment.  If the exchange rate on the original Invoice/Bill is the same as on the payment then the Exchange Gain/Loss will be zero.

Over time you may see that the AUD value of your foreign currency A/R and A/P has no relation to the foreign currency balance.  For instance, your A/R balance may be NZD0.00 but its AUD equivalent may be AUD12.34.  This is is just a revaluation affect between the the exchange rate on the original Invoices/Bills and their payments and the current exchange rate (in your Currency List).  You can adjust this imbalance through a Home Currency Adjustment General Journal - full guide is available here.

A similar effect will be seen if you are using a foreign currency bank account.  


Hope this explains the situation for you.

regards,
John