I have been experimenting with GnuCash' currency features and have
encountered some difficulties that I would like some comments on.
I just moved from Denmark to the US so I have bank accounts etc. in
both countries and the respective currencies, so I need GnuCash
accounts valued in both currencies. For income/expense accounts I
need two of each, I guess. Can I usefully keep both USD and DKK
accounts in the same database or do I need to create two separate
databases and manually link the two whenever there is a currency
transfer (for instance when I exchange USD to get DKK cash)?
I would prefer the former approach because I should be able to use
GnuCash' double entry code to keep the accounting consistent, but when
I experimented with this approach I noticed that the Assets and
Profits sums in the main GnuCash window become incorrect, because they
seem to just use the account balances as is without taking into
account that the balances can be in different currencies. The balance
and profit & loss reports have the same problem. Using double entry
the bottom line in the balance sheet and profit & loss report should
be identical, right?
Let me describe a more concrete example. Say I have a USD bank
account and a DKK cash account. I want to record a currency exchange
transaction where I exchange $100 from the bank account to DKK 700 in
cash. You can't do this directly since the USD bank account and the
DKK cash account don't share a common currency. So you can use a
currency account valued in USD and with security DKK. I can then
transfer $100 to the currency account in one transaction, and in a
second transaction transfer DKK 700 from the currency account to the
DKK cash account. After these two transaction the balances on the
three accounts are:
USD Bank USD/DKK Currency DKK Cash
$-100 0 DKK 700
In GnuCash' main window the Assets and Profits sums will be (-100 +
700) = 600 and 0, respectively, which is clearly wrong.
Another approach would be to use a split system, where two accounting
databases are used, one with all USD accounts and another with all
DKK accounts. To handle the above I would use and expense account in
the USD domain and a corresponding income account in the DKK domain to
record the transfer of funds from one domain to the other. This
approach obviously has problems.
So what am I missing here? Are these difficulties more a matter of
enhancing the balance and profit & loss reports to handle multiple
currencies or are they due to my misusing GnuCash?
All comments are welcome!
Thanks.
--
Per Bojsen <[EMAIL PROTECTED]>
6132 Lexington Ridge Drive
Lexington, MA 02421-8317
USA
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