IMHO the foreign currency AP/AR is a "feature" which shouldn't exist, and
all foreign invoices/bills should be converted to your "home" currency.

It would be best to refer to the IFRS standards (ref IAS 21):
https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2021/issued/part-a/ifric-22-foreign-currency-transactions-and-advance-consideration.pdf

"Paragraph 21 of IAS 21 The Effects of Changes in Foreign Exchange Rates
requires an
entity to record a foreign currency transaction, on initial recognition in
its
functional currency, by applying to the foreign currency amount the spot
exchange rate between the functional currency and the foreign currency (the
exchange rate) at the date of the transaction. Paragraph 22 of IAS 21 states
that the date of the transaction is the date on which the transaction first
qualifies for recognition in accordance with IFRS Standards (Standards)."

Alternatively US GAAP standards ASC 830

On Wed, 25 Feb 2026 at 08:48, Stellios & Sally <[email protected]> wrote:

> Standard accrual accounting practice directs:
>
> *       Foreign currency documents for payables and receivables should be
> recorded in the accounts on the dates they are raised in the foreign
> currencies with corresponding local currency using the then prevailing
> exchange rate.
> *       Foreign currency payments and receipts are recorded on the date of
> payment of receipt with corresponding local currency entries at the then
> prevailing spot rate.
>
>
>
> Clearly the exchange rates between raising the document and its payment
> will
> almost certainly be different thereby creating a currency gain/loss in the
> profit and loss account. GnuCash does not appear to handle this
> automatically. As a result, a difference in the Trial Balance equal to the
> currency gain/loss arises. The trail balance error is equal to the exchange
> rate gain/loss that appears in the local currency's Trading account.
>
>
>
> Can someone tell me if I have missed something in GnuCash. Or is this a
> feature omission in GnuCash?
>
>
>
> As an aside, GnuCash provides the "Lots" feature for handling capital
> gains.
> The currency gain/loss issue is conceptually no different.
>
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