Not sure if converting based on invoice date is legit. That's not the real
value of the cash when you got it. Hence, the concept of gains and losses
for rate fluctuations. Your actual USD balances will never match the
computer with your strategy. Another level of converting is needed.
-SNIP-
if customer purchases 3,000.00 EUR of parts, that will convert to some USD
amount and written to our files in USD. when the customer pays 3,000.00 EUR
for the parts, we will convert to USD based on the day that the order was
placed.
You're correct. We accept payment in both US and Canadian dollars and we never know exactly how much US $ we'll get paid by our Canadian dollar customers until their checks clear. What we do is inflate our Canadian prices slightly above the current exchange rate break-even point. Both our Canadian price and US price are stored in the order record at the time the order is placed. When we post the cash payment we enter the amount they paid in Canadian dollars, which is the exact amount they were charged, then the amount the bank posted to our account in US dollars. The posting program takes the difference between what was deposited and the order's original US dollar amount and puts it into a GL account we call "gain or loss on exchange". Ideally our fake exchange rate is high enough that we always see a gain, but the accounting comes out correct regardless.
-John
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