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VT Transaction+

Navigation: Multi-currency accounting

Accounting requirements

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Accounting standards normally require that:

a)Foreign currency transactions are initially translated to the base currency (e.g. GBP) at the exchange rate on the day of the transaction (or an average rate for the week or month if the exchange rate does not fluctuate significantly)*.

b)Monetary asset/liability balances (e.g. bank, customers, suppliers, stock) in foreign currencies are re-translated to the base currency at the exchange rate on the day of the financial year-end. The resulting exchange gain or loss should be included in the profit or loss.

c)Foreign currency transactions to non-monetary asset/liability accounts (e.g. fixed assets), P&L accounts (e.g. income and expenses) and VAT accounts, are not re-translated and should remain translated to the base currency at the rates at the time of transaction stated in a) above.

d)Exchange gains or losses arising from settlement of monetary transactions (e.g. payment of an supplier invoice at a different exchange rate to the invoice) should be included in the profit or loss.

Multi-currency accounting in VT Transaction+ is designed to meet these requirements. To enter foreign currency transactions, follow the steps in Entering transactions in order.

*If you enter transactions in foreign currency that are subject to VAT, you should use the rates on HMRC's website.