In order to track transactions in a foreign currency properly, you must create a number of accounts that are set up to use that currency, rather than British pounds. Later in the setup process, you'll enter these accounts as the linked accounts for transactions recorded using this currency. You cannot simply use the same accounts you use for your local currency transactions, because the currencies rarely trade at par with one another. (That is, one unit rarely buys exactly one monetary unit in any other currency.)
For information about creating accounts, see Choose the type of account you want. Before you begin, though, review If you make foreign sales and If you make foreign purchases to gain a better understanding of the accounts you'll need to add.
Here's a list of the accounts you're likely to need if you accept payment from customers in a foreign currency.
The account you use to track payments from customers must use the currency of the transactions it will be tracking. The account(s) you use to track VAT collected and paid must use the local currency. Other accounts used to track foreign-currency sales transactions can be assigned either the foreign currency or British pounds. In fact, with the exception of the account for payments from customers, you can use the same accounts that you use to track sales transactions to U.K. customers.
Using separate accounts for each currency will allow you to see more quickly where deposits and the like originated, but if that's not important to you, you may want to use the same accounts for all your sales.
Note: Only receipt transactions which are local currency may be grouped as a deposit of undeposited funds
Only receipt transactions which are U.K. currency may be grouped as a deposit of undeposited funds. Also, you may only use a U.K. currency account as the linked account for undeposited funds. |
Here's a list of the accounts you're likely to need if you make payments to suppliers in a foreign currency:
The account you use to track creditors balances must use the currency of the transactions it will be tracking. The account(s) you use to track VAT collected and paid must use the local currency. Other accounts used to track foreign-currency purchase transactions can be assigned either the foreign currency or British pounds. In fact, with the exception of the trade creditors account, you can use the same accounts that you use to track purchases from U.K. suppliers.
Using separate accounts for each currency will allow you to see more quickly where deposits and the like originated, but if that's not important to you, you may want to use the same accounts for all your purchases.