Exchange currency with a Money Changer

Software: Intuit #QuickBooks #accounting software

You may maintain a bank account in foreign currency, such as US dollar or Euro if you have lots of payment or receipt in a foreign currency. When the fund in a foreign currency bank account is low, you transfer fund over from a base currency bank account. However, due to the exchange rate offered by the bank is not favourable to you, you may change the money with a Money Changer, who is giving you a better exchange rate.

The money, which you withdraw from the base currency bank account, exchange with the Money Changer and then deposited into a foreign currency bank account.

You create the Money Changer as an Other Current Asset type of account in QuickBooks. Then, use a Write Cheque transaction to transfer the money from your base currency bank to the Money Changer account. The journal behind the Write Cheque transaction debits the Money Changer and credit the base currency Bank account.

Make Deposit

A Make Deposit or a General Journal can be used to transfer the fund between the Money Changer and the Bank account (foreign currency). This transaction has to be in foreign currency, so the cash book is tally with the bank statement. A General Journal can be used to transfer any amount left in the Money Changer account to the Exchange Gain/Loss account, which due to the exchange rate differences. The absolute value of net realised exchange gain/ loss has to be added to the GST Form 5 Box 3, Total Value of Exempt Supplies.

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