IM-B  Enter Multiple Currencies

Purpose of Program

Use this program to set up your foreign currencies and their associated General Ledger accounts.  You must establish one currency as your base currency; all other currencies are source currencies.

If Pay is set to N in IM-A  International Configuration, whenever you click the Convert to Base Currency button on the opening screen of this program, all the monetary accounts in the system that are maintained in source currency (Accounts Payable, Accounts Receivable, PO's Rec'd not Invoiced) are converted to your base currency using the rates currently entered in IM-C  Enter Currency Exchange Rates with the closest historical date prior to the date of conversion.  This would generally be run once per month at the end of the month prior to printing financial statements.

If Pay is set to Y in IM-A  International Configuration, then this conversion will take place whenever a payment is made or received using the conversion rate in effect as of the date of the payment.  Running Convert to Base would be done prior to printing financial statements to convert unpaid entries such as Accounts Payable and Accounts Receivable to base currency.

Customers and vendors can be assigned source currency codes within AR-A  Enter Customers and AP-A  Enter Vendors.   These are simply default currencies; at the sales order and purchase order level you can override these defaults and can thus transact in different currencies with the same customer or vendor.

Field Explanations

Code

A three character code that represents this currency.

Description

A 25 character description for this currency.

Base

Enter Y if this is your base currency, which is usually the domestic currency that you use for financial reporting.  You will not be given access to any of the other fields on the screen besides the first line because they are not relevant for the base currency.  Only one currency can be the base currency.  If you are setting up a source currency, enter an N in this field.

Symbol

This is the symbol (such as the "$" for dollars or the "£" for pounds) that will print next to the currency amounts on checks and forms.

Text

This is the text, such as "dollars" or "pounds", that will print on AP checks.

Pos

This establishes the position of the currency symbol relative to the amount on printed checks and forms.  If you want the currency symbol before the amount, enter an F in this field.  If you want the symbol printed after the amount (the French standard), enter a B in this field.

Decimals

The number of decimals that are to be printed for the amount on the check.  For example, one hundred dollars can be made to print the following ways: 0 decimals = $100; 1 decimal = $100.0; 2 decimals = $100.00; 3 decimals = $100.000.

ACCOUNTS PAYABLE

Control Account

Any programs that automatically post to Accounts Payable will post to this GL account when this currency is being used.  This GL account would normally be located adjacent to your base currency's Accounts Payable account.

Postings to this GL account are always in the source currency.  For example, if you process a vendor invoice through AP-C  Enter Purchase Order Invoices, a credit in source currency is made to the AP Control Account.  The offsetting debit is made to this currency's PO's Received not Invoiced Control Account, which is also maintained in source currency.

Another example of posting to this account is when you make a payment to your vendor through AP-H  Print Checks.  If the Pay option in IM-A  International Configuration is set to N, a debit (in source currency) is made to the AP Control Account.  The offsetting credit (in source currency) is made to this currency's Bank Account.

In the same example, but this time with the Pay option in IM-A set to Y, there are two GL transactions.  The first one is the same as in the paragraph above.  The second is a currency conversion transaction whereby the amount of the payment is converted to your base currency using the closest historical exchange rate maintained in IM-C  Enter Currency Exchange Rates.  This base currency amount is then debited to this currency's F/E Gain/Loss-Trxns account and the offsetting amount is credited to this currency's F/E Gain/Loss-Conversions account. Thus, the gain or loss is recorded at the time of transaction rather than when the Convert to Base Currency routine is run.

AP Conversions

The AP Conversions GL account would normally be located adjacent to this currency's AP Control account.

Whenever the Convert to Base Currency routine is run, the following GL transactions take place.

First, the last conversion transaction is reversed.  If the AP Conversions account has a credit balance, it is debited by the amount (in base currency) stored in the Last Conversion Values that you see in the lower right hand portion of the screen.  If it has a debit balance, it gets credited.  The offsetting entry is made to this currency's F/E Gain/Loss-Conversions account.

Second, a currency conversion transaction is made using the exchange rate maintained in IM-C  Enter Currency Exchange Rates.  The formula is: (current exchange rate) - 1 = (differential rate).  (differential rate) x (AP Control Acct balance) = AP Conversion amount.

This amount is credited to this currency's AP Conversions account and the offsetting debit is made to this currency's F/E Gain/Loss Conversions account.

As a result of these transactions, the sum of your AP Control Account and your AP Conversions account represents the total of your Accounts Payable in base currency.  This sum total is the figure you use when you reconcile your AP aging report (which you must run in base currency) with the General Ledger.

Any gain or loss resulting from this conversion is reflected on your income statement in this currency's F/E Gain/Loss-Conversions account.

ACCOUNTS RECEIVABLE

Control Account

Any programs that automatically post to Accounts Receivable will post to this GL account when this currency is being used.  This GL account would normally be located adjacent to your base currency's Accounts Receivable account.

Postings to this GL account are always in the source currency.  For example, when you post an invoice in this currency, the AR Control Account for this currency gets debited in the source currency.  The offsetting entries for your Sales and Sales Tax Payable accounts get converted to your base currency at the closest historical exchange rate maintained in IM-C  Enter Currency Exchange Rates.  The difference between the debit and credits gets posted to this currency's F/E Gain/Loss-Trxns account.

Another example of posting to this account is when you receive a payment from a customer through AR-C  Record Payments.  If the Pay option in IM-A  International Configuration is set to N, a credit (in source currency) is made to the AR Control Account.  The offsetting debit (in source currency) is made to this currency's Bank Account.

In the same example, but this time with the Pay option in IM-A set to Y, there are two GL transactions.  The first one is the same as in the paragraph above.  The second is a currency conversion transaction whereby the amount of the payment is converted to your base currency using the exchange rate maintained in IM-C  Enter Currency Exchange Rates.  This base currency amount is then credited to this currency's F/E Gain/Loss-Trxns account and the offsetting amount is debited to this currency's F/E Gain/Loss-Conversions account.  Thus, the gain or loss is made at the time of transaction rather than when the Convert to Base Currency routine is run.

AR Conversions

The AR Conversions GL account would normally be located adjacent to this currency's AR Control account.

Whenever the Convert to Base Currency routine is run, the following GL transactions take place.

First, the last conversion transaction is reversed.  If the AR Conversions account has a debit balance, it is credited by the amount (in base currency) stored in the Last Conversion Values that you see in the lower right hand portion of the screen.  If it has a credit balance, it gets debited.  The offsetting entry is made to this currency's F/E Gain/Loss-Conversions account.

Second, a currency conversion transaction is made using the exchange rate maintained in IM-C  Enter Currency Exchange Rates.  The formula is: (current exchange rate) - 1 = (differential rate).  (differential rate) x (AR Control Acct balance) = AR Conversion amount.

This amount is debited to this currency's AR Conversions account and the offsetting credit is made to this currency's F/E Gain/Loss Conversions account.

As a result of these transactions, the sum of your AR Control Account and your AR Conversions account is the sum total of your Accounts Receivable in base currency.  This sum total is the figure you use when you reconcile your AR aging report (which you must run in base currency) with the General Ledger.

Any gain or loss resulting from this conversion is reflected on your income statement in this currency's F/E Gain/Loss-Conversions account.

AR Deposits

This field holds the GL account for AR deposits (entered in AR-N  Enter/Print Sales Order Deposits) made in this currency.

AR Dep. Conv.

The same set of transactions that occur between the Accounts Receivable Control and Conversion account will also be made to the AR Deposit accounts when Convert to Base is run.

Interest

If interest is charged on overdue accounts associated with this currency, this will be the monthly interest rate used.  For example, if you are charging 18% per year, then this amount would be 1.5.  (1.5 percent x 12 months = 18 percent)

Days

The number of days an invoice must be past due before interest is charged for a customer transacting in this currency.

PO'S RECEIVED NOT INVOICED

Control Account

Any programs that automatically post to PO's Rec'd not Invoiced will post to this GL account when this currency is being used.  This GL account is normally located adjacent to your base currency's PO's Rec'd not Invoiced account.

Postings to this GL account are always in the source currency.  For example, when you receive a purchase order through PO-C  Receive Purchase Orders, the PO's Rec'd not Invoiced account for this currency gets credited in the source currency.  The offsetting entry for Inventory or WIP gets converted to your base currency at the closest historical exchange rate maintained in IM-C  Enter Currency Exchange Rates.  The difference between the credit and debit gets posted to this currency's F/E Gain/Loss-Trxns account.

Another example of posting to this account is when you process a vendor invoice through AP-C  Enter Purchase Order Invoices.  In this case a debit in source currency is made to this currency's PO's Received not Invoiced Control Account and an offsetting credit in source currency is made to this currency's AP Control Account.

PORNI Conversions

The PORNI Conversions GL account would normally be located adjacent to this currency's PORNI Control account.

Whenever the Convert to Base Currency routine is run, the following GL transactions take place.

First, the last conversion transaction is reversed.  If the PORNI Conversions account has a credit balance, it is debited by the amount (in base currency) stored in the Last Conversion Values that you see in the lower right hand portion of the screen.  If it has a debit balance, it gets credited.  The offsetting entry is made to this currency's F/E Gain/Loss-Conversions account.

Second, a currency conversion transaction is made using the exchange rate maintained in IM-C  Enter Currency Exchange Rates.  The formula is: (current exchange rate) - 1 = (differential rate).  (differential rate) x (PORNI Control Acct balance) = PORNI Conversion amount.

This amount is credited to this currency's PORNI Conversions account and the offsetting debit is made to this currency's F/E Gain/Loss Conversions account.

As a result of these transactions, the sum of your PORNI Control Account and your PORNI Conversions account is the sum total of your PO’s Rec¡¦d not Invoiced in base currency.  This sum total is the figure you use when you reconcile your PO¡¦s Rec¡¦d not Invoiced report (which you must run in base currency) with the General Ledger.

Any gain or loss resulting from this conversion is reflected on your income statement in this currency's F/E Gain/Loss-Conversions account.

BANK ACCOUNT

Bank accounts for each currency are set up in AD-B  Checking Accounts Defaults.

Bank Account Conversions

The Bank Account Conversions GL account would normally be located adjacent to this currency's bank account GL account.

Whenever the Convert to Base Currency routine is run, the following GL transactions take place.

First, the last conversion transaction is reversed.  If the Bank Account Conversions account has a credit balance, it is debited by the amount (in base currency) stored in the Last Conversion Values that you see in the lower right hand portion of the screen.  If it has a debit balance, it gets credited.  The offsetting entry is made to this currency's F/E Gain/Loss-Conversions account.

Second, a currency conversion transaction is made using the exchange rate maintained in IM-C  Enter Currency Exchange Rates.  The formula is: (current exchange rate) - 1 = (differential rate).  (differential rate) x (Bank Acct Control Acct balance) = Bank Acct Conversion amount.

This amount is debited to this currency's Bank Account Conversions account and the offsetting credit is made to this currency's F/E Gain/Loss Conversions account.

As a result of these transactions, the sum of your Bank Account Control Account and your Bank Account Conversions account is the sum total of your Bank Account in base currency.

Any gain or loss resulting from this conversion is reflected on your income statement in this currency's F/E Gain/Loss-Conversions account.

FOREIGN EXCHANGE

F/E Gain/Loss-Trxns

This GL account is normally an expense account and is located adjacent to your F/E Gain/Loss-Conversions account for this currency.  The sum of these two accounts represent the accumulated gain or loss for this currency on your income statement.

F/E Gain/Loss-Trxns gets affected in all cases whenever purchase order receipts or invoice postings are made in this currency.  Payment transactions to vendors and from customers also affect this account when the Pay option in IM-A  International Configuration is set to Y.  The following explains each of these situations.

First, when you receive a purchase order to Inventory or WIP, this currency's PORNI Control Account gets credited in source currency and your Inventory or WIP account gets converted to base currency at the current exchange rate and is debited.  The difference between the source currency amount and the base currency amount gets posted to this currency's F/E Gain/Loss-Trxns account.

Second, when you invoice a sales order, this currency's AR Control Account gets debited and your Sales Tax Payable account gets credited, both in source currency.  Your Sales account(s) gets converted to base currency and is credited.  The difference between the source currency amounts and the base currency amounts gets posted to this currency's F/E Gain/Loss-Trxns account.

Third, when you make a payment to your vendor and the Pay option in IM-A  International Configuration is set to Y, a debit (in source currency) is made to this currency's AP Control Account.  The offsetting credit (in source currency) is made to this currency's Bank Account.  Following that is currency conversion transaction whereby the amount of the payment is converted to your base currency. This base currency amount is then debited to this currency's F/E Gain/Loss-Trxns account and the offsetting amount is credited to this currency's F/E Gain/Loss-Conversions account.

Fourth, when you receive a payment from your customer and the Pay option in IM-A  International Configuration is set to Y, a credit (in source currency) is made to this currency's AR Control Account.  The offsetting debit (in source currency) is made to this currency's Bank Account.  Following that is a currency conversion transactions whereby the amount of the payment is converted to base currency.  This base currency amount is then credited to this currency's F/E Gain/Loss-Trxns account and the offsetting amount is debited to this currency's F/E Gain/Loss-Conversions account.  Thus, the gain or loss is made at the time of transaction rather than when the Convert to Base Currency routine is run.

F/E Gain/Loss-Conversions

This GL account is normally an expense account and is located adjacent to your F/E Gain/Loss-Trxns account for this currency.  The sum of these two accounts represent the accumulated gain or loss for this currency on your income statement.

Whenever you run the Convert to Base Currency routine, which is run whenever you are printing financial statements or reviewing financial data, your monetary accounts for this currency (Accounts Payable, Accounts Receivable, PO's Received not Invoiced, Bank Account) get converted to base currency.  The resulting gain or loss gets posted to this account.

For details on what occurs during the Convert to Base Currency routine, see the Conversions sections above for each of the monetary accounts.

Last Conversion Values

These are the last values (in base currency) that were posted to each of your monetary Conversions accounts the last time the Convert to Base Currency routine was run.  

Each time the Convert to Base Currency routine is run, these amounts will be used to make a reversing entry to each of the monetary Conversions accounts, with the offsetting entry going to the F/E Gain/Loss-Conversions account.  For details on this process, see the Conversions sections above for each of the monetary accounts.

General Program Operation

To enter a new currency, from the opening list click the Add button.  Enter values in all the fields and save the record when finished by clicking on Save or pressing F10.  See Field Explanations above for details.

To edit an existing record, from the opening list highlight the currency you want and click the Edit button or double click on that item.  Change any fields and re-save the record.

Whenever you wish to print financial statements or review financial data, go to this program and, from the opening list screen, click on the Convert to Base Currency button.  This will convert all your source currency monetary accounts (Accounts Payable, Accounts Receivable, PO's Rec'd not Invoiced, Bank Accounts) into base currency, with any resulting gain or loss flowing to your F/E Gain/Loss-Conversions GL account.