Understanding exchange accounts

Multicurrency Overview > What is Multicurrency? > Understanding exchange accounts

For every foreign-currency account you create, there also must be a companion exchange account to track the effects that changes in the exchange rate have on the foreign-currency account. This is known as a "dual-account" approach to multicurrency. Each foreign-currency account must have its own exchange account -- the same exchange account can't be used for multiple foreign-currency accounts. MYOB Accounting Plus will create an exchange account for you each time you create a foreign-currency account, if you like, or you can specify an exchange account you've already created.

Although exchange accounts use the British pound as their currency, it may be helpful to think of the amounts in these accounts as generic units of money, rather than a specific currency.

For example, assume you've deposited 100 Canadian dollars in your Canadian bank account. If the exchange rate is .46, your 100 Canadian dollars are worth £46. Your "Canadian Bank" account in Accounting Plus will show a debit balance of 100 Canadian dollars, and your "Canadian Bank Exchange" account will show a balance of -£54. The number of monetary units in the two accounts is 46 -- which is the value of the account in pounds.

You'll seldom need to make entries in an exchange account-these accounts are updated automatically when you record sales and purchases and spend and receive money. You will need to enter a beginning balance for each of your exchange accounts if the foreign-currency accounts associated with them has a balance. You'll also update the exchange accounts each month when you record unrealised gains and losses. (These are the potential amounts by which the balances of your accounts have changed as a result of exchange rate fluctuations. For more information about unrealised gains and losses see Recording unrealised gains and losses.)