Tag Archives: MoneyWorks multicurrency

Daily exchange rate or monthly exchange rate?

Software: MoneyWorks accounting software

Which exchange rate should I be using? Daily exchange rate or monthly exchange rate?

From the IRAS e-tax Guide “GST: Exchange Rates for GST Purpose”, which was published on 30 September 2013, stated that:

… The exchange rate must be the daily exchange rate corresponding to the time of supply. If not, it must be a good approximation of this rate;

Daily exchange rate refers to the prevailing buying rate, selling rate or average of the two. The use of the exchange rate on a particular day of the month (e.g. last working day of the previous month) or an average rate over a specific period (e.g. average of the daily rates for the previous month) to approximate the daily exchange rate corresponding to the time of supply is acceptable…

For me, I preferred to use the exchange rate of the last working day of the previous month (month end exchange rate) for my current month’s transaction. A home currency revaluation journal will be followed after the exchange rate is entered. If you are using MoneyWorks accounting software, the home currency revaluation journal is automatically created to adjust the foreign bank, accounts receivable and accounts payable account.

Highlight the currency from the Currencies list and click the “Set Rate” button to update the latest exchange rate.

MoneyWorks accounting software


MoneyWorks | The Exchange Gain/Loss, how it works?

Software: MoneyWorks accounting software

How it works?

Assume that as of 31 May you had set the exchange rate for 1SGD to 0.8000USD (using the month end exchange rate).

You recorded a USD bill (Purchase Invoice) as of 12 June for the amount of USD10,000, the base currency equivalent amount will be SGD12,500 (10,000/0.8000). The double entry for this Purchase Invoice transaction:

DEBIT Purchase 10,000

CREDIT USD Accounts Payable 10,000

DEBIT Purchase (exchange) 2,500

CREDIT USD Accounts Payable~~DEL (Exchange) 2,500

As of 30 June, you changed the exchange rate to 1SGD:0.7800USD. Since the USD Purchase Invoice is still outstanding, MoneyWorks will create an exchange journal for the unrealized exchange gain/loss automatically. The double entry for the exchange journal:

CREDIT USD Accounts Payable~~DEL 320.51

DEBIT Exchange Gain/Loss Unrealized 320.51

When the exchange rate changed from 1SGD:0.800USD to 1SGD:0.7800USD, there is an unrealized exchange loss of 320.51.

On the following month, as of 31 July, if the exchange rate has changed further to 1SGD:0.7900USD, MoneyWorks will create another exchange journal to correct the outstanding USD Accounts Payable.

10,000/0.8000 = 12,500.00
10,000/0.7900 = 12,658.23
Corrected Exchange Loss = 12,500 – 12,658.23 = -158.23
Therefore, the exchange journal amount is 320.51 – 158.23 = 162.28

The double entry of the exchange journal will be:

DEBIT USD Accounts Payable~~DEL 162.28

CREDIT Exchange Gain/Loss Unrealized 162.28

This will give a net unrealized exchange loss of 158.23 (320.51 – 162.28).

On 5 August, you paid USD10,000 to the supplier at the exchange rate of 1SGD:0.7900USD (exchange rate as of 31 July), the base currency equivalent will be SGD12,658.23. The double entry for the payment transaction:

DEBIT USD Accounts Payable 10,000
DEBIT USD Accounts Payable~~DEL 2,658.23

CREDIT Bank USD 10,000
CREDIT Bank USD~~DEL 2,658.23

DEBIT Exchange Gain/Loss 158.23

CREDIT Exchange Gain/Loss Unrealized 158.23

MoneyWorks reclassified the unrealized exchange loss of 158.23 to the exchange loss account automatically during the payment transaction.

MoneyWorks - The exchange gain/loss

MoneyWorks has simplified the exchange gain/loss process for the accountant. Unlike some of the accounting software, which you are required to pass the unrealized exchange gain/loss journal manually; MoneyWorks automatically did the necessary unrealized gain/loss adjustment for you once you have updated the exchange rate of the foreign currency.



MoneyWorks | The historical exchange rate

Software: MoneyWorks accounting software

MoneyWorks does keep track of the monthly exchange rate you set for the foreign currencies. The exchange rate report can be found in the Reports menu | Foreign Currency | Exchange Rate.

MoneyWorks - Historical Exchange Rate

The exchange rate shown is the rate set on the last day of the month.