How does Currency Gains (losses) work?

I do a number of international transactions to USD, GBP and many more where i purchase and sell goods.

I am wondering how does this feature work (not from a technical stand point). I am trying to figure out when to put an exchange rate and when not to.

For example, yesterday i paid a purchase invoice in a different currency. I enter the AUD value (i live in Australia) of the amount i transferred across and i enter the amount in the next tab that i got in the different currency (next to tracking Code we can enter the amount in foreign currency). Do i add an exchange rate when i do this?

I entered a currency exchange rate before i did my ever first transaction in a different currency.

I have tried looking in the forum and guides but i don’t think there is much information on this as the guides are being worked on. I am not that accounting savvy so please excuse this question if it should be making sense.

You don’t have to enter global exchange rates every day. Entering them once a month should be enough. But you should always enter them as of the last day of your financial year to make sure your closing financial statements are accurate.

When paying purchase invoice from bank account of different currency than the invoice itself, you need to enter two amounts. Amount which has been deducted from bank account and amount in foreign currency which you expect your supplier to receive. This way balances on both sides in both currencies are correct. Manager will figure out currency gain / loss on that transaction.

@lubos

Thank u for your response.

In the scenario below does that mean it doesn’t matter if I add a currency exchange rate?

“When paying purchase invoice from bank account of different currency than the invoice itself, you need to enter two amounts. Amount which has been deducted from bank account and amount in foreign currency which you expect your supplier to receive. This way balances on both sides in both currencies are correct. Manager will figure out currency gain / loss on that transaction.”

That’s right.