In QuickBooks, there are only three types of accounts can be set in Foreign Currency. They are Bank, Accounts Receivable and Accounts Payable account type.
If your home currency is in Singapore Dollar, all accounts (except Bank, Accounts Receivable and Accounts Payable account, which can be set in foreign currency) will be in Singapore Dollar.
How does the system work?
When your home currency is in Singapore Dollar (SGD), your inventory assets price and inventory value-on-hand will be in SGD.
Euro 1 : S$1.80
US$1 : S$1.40
Bill Received: 100 pcs of item 1 from Supplier A at Euro 100 each.
Invoiced: 30 pcs of item 1 to Customer B at US$190.00 each
When Entering Bill from Supplier A for 100 pcs x Euro 100 = Euro 10,000.00, the double entry will be:
Debiting Inventory Assets account: 100 pcs x Euro 100 = S$18,000.00
(i.e. Euro 10,000.00 x 1.8)
Crediting Accounts Payable: S$18,000.00 (Euro 10,000.00)
QuickBooks will convert from the Euro Bill into Inventory Assets account as a SGD amount.
When creating Invoice to Customer B for 30 pcs x US$190.00 = US$5,700.00, the double entry will be:
Debiting Accounts Receivable: 30 pcs x US$190.00 = S$7,980.00 (US$5,700.00 x 1.4)
Crediting Sales account: S$7,980.00
Debiting Cost of Goods Sold account: 30 pcs x S$180.00 = S$5,400.00
Crediting Inventory Assets account: S$5,400.00
The Average Cost in QuickBooks item will always in SGD (home currency).
Join my QuickBooks training class to have a better understanding on how QuickBooks can work for you.