Many accountants I’ve met understand accounting, but not the Multicurrency functionality in QuickBooks. I’ve seen lists of year-end adjusting entries that clients are supposed to enter into QuickBooks, and it’s clear that the accountants who created them don’t understand QuickBooks. If I see an adjusting entry that tells a client to add or take away a certain number of foreign currency units to allow for its value in the home currency, I know I have to intervene. Instead of a regular journal entry that will mess with the foreign account’s reconciliation, I show my clients how to create a Home Currency Adjustment (in QuickBooks Desktop) or a Currency Revaluation (in QuickBooks Online). These special entries do not change the number of foreign currency units in, let’s say, a foreign-denominated bank account. Instead, they keep the number of foreign currency units (e.g. Euros, Pounds Sterling, Pesos, etc.) unchanged, and change their value in the home currency. The posting affects Exchange Gain or Loss.
If a client uses multiple currencies on an ongoing basis (not just once or twice a year), and if the client maintains foreign assets or liabilities (e.g. bank and/or credit card accounts, Accounts Receivable, Accounts Payable, etc.), do not enter every transaction as if it’s in the home currency. Instead, consult with Esther Friedberg Karp for multicurrency consulting. She’ll tell you what the best steps are in order to maintain accurate multicurrency books in real time and to keep an eye on profitability and potential business issues before they are too far in the past to address and correct. Esther will show you how to keep your thumb on the pulse of your foreign transactions and their impact on your business.