Exchange Rates - Sales / Cost of Sales Calculations calculates the Sales / Cost of Sales values for invoices in foreign currencies based on the exchange rates entered under Settings. This results in incorrect Sales / Cost of Sales totals because the exchange rates entered under Settings are mid-market (whereas the transactions are at the currency buy / sell rates which are higher / lower than the mid-market rates) and it is also not viable to enter the exchange rate for every single day of the year. Ideally the Sales / Cost of Sales values should be based on the Payment / Receipt amounts (where the Amount in local currency is entered and the corresponding Currency amount also entered). How can we get this to work properly? Could possibly:

  • Use the payment / receipt amount rather than the exchange rate, as described above?
  • Automatically calculate exchange rates based on payments / receipts? Cognisance would need to be taken of the difference between the currency buy and sell rates however.
    Thanks :-).

Cost of goods sold is determined from the current average cost (which is always in your base currency) at the moment a sales transaction is entered. Exchange rates are irrelevant.

Exchange rates are whatever you enter. Mid-market, buy, and sell rates are unknown to the program and also irrelevant. Foreign currency transactions are stored in the foreign currency in which they are entered. They are only converted to base currency for the balance sheet based on the most recent exchange rate. Differences are posted to foreign exchange gains/losses automatically as you enter new exchange rates.

Thank-you for the super-fast reply Tut :slight_smile: .
I was just wondering if this was what “Foreign exchange gains (losses)” was for - my apologies, I perhaps should have done some more digging before reverting to the forums.
Thanks again :+1::slight_smile:

In addition to what my friend @Tut just described, in many laws, taxpayers need to apply standard rates issued by some authority for all tax transactions.

These standard rates will be used for everything within Manager except for actual realized conversions in receipts, payments and inter account transfers. The actual conversions do not apply rates and instead use currency amounts – as they should.

What you suggest is using realized rates for accrued transactions. While it may seem logical at first, but this isn’t practical for tax purposes.