Tag Archives: MoneyWorks multicurrency

The Delta account (AccountCode-~~DEL)

Software: MoneyWorks #accounting software

In the MoneyWorks general ledger, a foreign currency account is represented as two separate amounts: the value in the foreign currency, and the value of the difference between that currency and the base currency. The difference is stored in a (normally hidden) account called a “delta account”, so that the following is always true:

Base Currency Value = Foreign Currency Value + Delta Value

— MoneyWorks v7 User Guide Page G272, Multi-currencies: Behind the Scenes

You can keep the bank, accounts receivable and account payable account in foreign currency; and each of these accounts has a Delta account. The -~~DEL account is a system account, which captures the “exchange ratio” of a foreign currency account.

Assuming you record a foreign currency Purchase Invoice of US$5,786.00 in the MoneyWorks accounting system at an exchange of 0.7500USD:1.0000SGD (Singapore Dollar is the Base currency). The journal behind:

Debit 160.100: Inventory Assets account 7,714.67

Credit 230.200: Accounts Payable (USD) 5,786.00
Credit 230.200-~~DEL: Accounts Payable (USD 1,928.67

The foreign currency value of 5,786.00 (account code 230.200) and the Delta Value of 1,928.67 (account code 230.200-~~DEL) added up is the base currency value 7,714.67 (5,786 / 0.75).

The -~~DEL account

 

Reclassifying a foreign currency account after revaluation of currency have done in MoneyWorks accounting software

Software: MoneyWorks #accounting software

MoneyWorks Gold Accounting SoftwareYou recorded a foreign currency Term Deposit of US$100,000.00 with a period exchange rate of 0.72USD:1SGD. When the exchange rate has changed to 0.73USD:1SGD at the period end, MoneyWorks revalue the foreign currency. An exchange journal of debiting the Exchange Gain/Loss account and credit the Term Deposit account of S$1,902.69 passed automatically into MoneyWorks accounting system.

Working:
Original rate: US$100,000 / 0.72 = S$138,888.89
Adjusted rate: US$100,000 / 0.73 = S$136,986.30
Exchange Loss: 138,888.89 – 136,986.30 = $1,902.59

After revalued the currency, you realised that instead of recording the deposit of US$100,000 into a single Term Deposit account, it should be separated into two Term Deposit accounts. That is, US$70,000 for the Term Deposit 1 account and US$30,000 for the Term Deposit 2 account.

Assuming you reclassify the account at the period end via a Fund Transfer method. You transfer US$30,000 from the Term Deposit 1 account to the Term Deposit 2 account at the period end. The journal behind the fund transfer is:

Debit the Term Deposit 2 account 30,000
Debit the Term Deposit 2 ~ Delta account 11,095.89

Credit the Term Deposit 1 account 30,000
Credit the Term Deposit 1 ~ Delta account 11,095.89

Since the exchange rate has changed, the fund transfer will automatically pick up the exchange rate of 0.73USD:1SGD.

Although the amount in the original term deposit account has reduced from US$100,000 to US$70,000, the exchange gain/loss account remain unchanged as the revaluation of currency is based on US$100,000 at 0.72USD:1SGD.

What if the reclassification of account has recorded before the exchange rate changed? Will there be any changes in the exchange gain/loss?

You record the funds transfer (reclassification of account) of US$30,000 from Term Deposit 1 account to the Term Deposit 2 account with the exchange rate of 0.72USD:1SGD. The journal behind the transfer is:

Debit the Term Deposit 2 account 30,000
Debit the Term Deposit 2 ~ Delta account 11,666.67

Credit the Term Deposit 1 account 30,000
Credit the Term Deposit 1 ~ Delta account 11,666.67

When the exchange rate has changed at the period end, MoneyWorks revalue the currency, the exchange journal:

Debit the Exchange Gain/Loss account 1,902.59

Credit the Term Deposit 1 account 1,331.81
Credit the Term Deposit 2 account 570.78

Working:

Term Deposit 1:
Original Rate: US$70,000 / 0.72 = S$97,222.22
Adjusted Rate: US$70,000 / 0.73 = S$95,890.41
Exchange Loss: S$(97,222.22 – 95,890.41) = S$1,331.81

Term Deposit 2:
Original Rate: US$30,000 / 0.72 = S$41,666.67
Adjusted Rate: US$30,000 / 0.73 = S$41,095.89
Exchange Loss: S$(41,666.67 – 41,095.89) = S$570.78

Total Exchange Loss: S$(1,331.81 + 570.78) = S$1,902.59

From the above examples, both reclassifications of account method derive the similar result. That is, have a similar exchange loss S$1,902.59.

MoneyWorks exchange journal

The Balance Sheet printed from both method have a similar debit balance of S$95,890.41 in the Term Deposit 1 account and S$41,095.89 in the Term Deposit 2 account.

Working:

Method 1:
Term Deposit 1:
Debit US$100,000 / 0.73 = S$136,986.30
Credit US$30,000 / 0.73 = S$41,095.89
Debit Balance: S$95,890.41

Term Deposit 2:
Debit: US$30,000 / 0.73 = S$41,095.89

Method 2:
Term Deposit 1: US$70,000 / 0.73 = S$95,890.41
Term Deposit 2: US$30,000 / 0.73 = S$41,095.89

Whether you did the reclassify of an account before or after the currency revaluation, MoneyWorks takes care of it.

Try #MoneyWorks now!

 

Setup multiple currency in MoneyWorks accounting software

Software: MoneyWorks accounting software

Before you turn on the multiple currency feature in MoneyWorks, you should BACKUP the company file. You cannot change or remove the multiple currency once it has turned on.

To turn on the multiple currency feature, go to the Edit menu | Document Preferences | Locale/Currency tab

Assume your base currency is Singapore Dollar.

First, you check the checkbox for “Use custom base currency format (instead of system format)” and enter ‘S$” in the Symbol field. This will prevent MoneyWorks from using the system currency format (some computer system may set “£” or other currency symbol as a default currency symbol). Next, check the checkbox for “Use multiple currencies in this document”, and select your base currency (in this case, we use SGD – Singapore Dollars).

Setup multiple currency

You need to add “Exchange Gain/Loss” account and “Exchange Gain/Loss – Unrealised” account in the Chart of accounts list. These two accounts will be tagged with the currency, which you are going to create later. For example, when you add a new USD currency (From the Show menu | Currencies) you need to add the “Exchange Gain/Loss – Unrealised” account, which you have created, into the “Unrealised Loss/Gain Account” field, and add the “Exchange Gain/Loss” account into the “Currency Loss/Gain Account” field.

Besides, you need to have a Suspend USD Bank to facilitate payment/receipts against invoices (even if you do not have a real one). For example, when you bank in the payment received from a USD currency’s customer to a SGD bank account, MoneyWorks will first post the payment received into the Suspend USD Bank account and then transfer the amount to the actual SGD bank account.

You also need to check the checkboxes for “I send invoices in this currency” and “I receive invoices in this currency”; and enter the account code into the “Accounts Receivable” and “Accounts Payable” control account field.

Currency

*Please refer to MoneyWorks v7 User Guide page G-267, Multi-Currency.