Understanding Currency Gains and Losses

Currency gains and losses are based on exchange rate fluctuations that occur on transactions that involve more than one currency. Two types of gains and losses exist:

  • Unrealized gains and losses

  • Realized gains and losses

Unrealized gains and losses are calculated on unpaid invoices the open portion of partially paid invoices at the end of a fiscal period, whereas realized gains and losses are calculated at the time of receipt.