1. Using Subledger Accounting
  2. How Foreign Currency Journals are Balanced

How Foreign Currency Journals are Balanced

Whenever you enter a foreign currency journal on the Create Subledger Journal Entry page or spreadsheet, the system automatically calculates any currency exchange gain or loss and records it as a balancing line.

This ensures that the journal entry is always balanced, and that any exchange gains or losses are tracked and reported accurately. The system takes into account current exchange rates when calculating the gain or loss.

When suspense is not enabled, currency gain or loss balances are automatically rounded to a user-defined rounding account. You can transfer currency exchange gain or loss balances to another account using a manual journal entry.

When suspense is enabled, the system will still record currency gains or losses against the suspense account.

Some advantages:

  • Supports manual journal entries with currency exchange gains and losses.
  • Automatically record currency gains and losses when entering foreign currency journals.
    Note: Define a rounding account for the ledger to record exchange gains and losses automatically.
Consider a manual foreign currency journal, as shown below. The exchange rate for entered currency Singapore Dollar to the ledger currency US Dollar is 2.045 on line 1 and 2.05 on the remaining lines. The journal is balanced in entered amounts but is out of balance in accounted amounts due to currency exchange gain or loss.
Line Account Accounting Class Currency Entered Debit Entered Credit Accounted Debit (USD)

Accounted Credit

(USD)
1 01-000-1140-0000-000 Accrual SGD 130 265.85
2 01-000-1150-0000-000 Accrual SGD 50.00 102.50
3 01-000-1160-0000-000 Accrual SGD 40.00 82.00
4 01-000-1170-0000-000 Accrual SGD 10.00 20.50
5 01-000-1130-0000-000 Accrual SGD 30.00 61.50
Total 265.85 266.50
When the journal is saved in final status, the system automatically calculates the currency exchange gain or loss and records it as a balancing line in the user-defined rounding account.
Line Account Accounting Class Currency Entered Debit Entered Credit Accounted Debit (USD)

Accounted Credit

(USD)
1 01-000-1140-0000-000 Accrual SGD 130 265.85
2 01-000-1150-0000-000 Accrual SGD 50.00 102.50
3 01-000-1160-0000-000 Accrual SGD 40.00 82.00
4 01-000-1170-0000-000 Accrual SGD 10.00 20.50
5 01-000-1130-0000-000 Accrual SGD 30.00 61.50
6 01-000-7826-0000-000 Balance SGD 0.00 0.65
Total 266.50 266.50

Let's take a look at some more examples:

Example 1 -Both unrounded and rounded accounted amounts are not balanced. Suspense enabled.

Account Currency Rate Entered Debit Entered Credit Unrounded Debit Unrounded Credit Accounted Debit Accounted Credit
01- E1 EUR 1.465 1170.85 1715.29525 1715.30
01-E2 EUR 1.465 17.69 25.91585 25.92
01-E3 EUR 1.465 54.88 80.3992 80.40
01-E4 EUR 1.465 5599.14 8202.7401 8202.74
01-E5 EUR 1.465 5599.14 8202.7401 8202.74
01-E6 EUR 1.465004 12441.70 18227.14027 18227.14
01-suspense EUR 1 0 0.0497668 0.04
12441.7 12441.70 18227.14027 18227.14027 18227.14 18227.14

Example 1 - Both unrounded and rounded accounted amounts not balanced that infers currency gain or loss. Suspense not enabled- Single BSV

Account Currency Rate Entered Debit Entered Credit Unrounded Debit Unrounded Credit Accounted Debit Accounted Credit
01- E1 EUR 1.465 1170.85 1715.29525 1715.30
01-E2 EUR 1.465 17.69 25.91585 25.92
01-E3 EUR 1.465 54.88 80.3992 80.40
01-E4 EUR 1.465 5599.14 8202.7401 8202.74
01-E5 EUR 1.465 5599.14 8202.7401 8202.74
01-E6 1.465004 12441.70 18227.14027 18227.14
01- rounding (level1) 0.0497668 0.05
01- rounding(level 2) 0.01
12441.7 12441.70 18227.14027 18227.14027 18227.15 18227.15