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zoe478
May 6, 2024
Question

Multi Currency Tranactions

  • May 6, 2024
  • 1 reply
  • 0 views

I believe that I am finally getting a handle on how to do transactions in our European bank account. I have spent hours watching videos. Now I have two questions:

1) Do I need to do a home currency adjustment if both invoice and payments are done in euros with the money being deposited into or withdrawn from the European bank account? If so, how is the best way to do this?

3) How do I handle transferring money from our European bank account to our US bank account? I made a transfer of 55,000 euros and using the exchange rate for the day of the transfer I calculated that the amount in US$ should be approximately $58,500; however the actual deposit was only $56,800. Why the difference and how do I handle this? I saw only about $150 for bank fees.

Thanks for your help.

Marilyn

1 reply

Tori B
Tori B
May 6, 2024

Hi there, @zoe478.

 

Thanks for taking the time to reach out to the QuickBooks Community. I hope your day is going great so far. 

 

For your first question, some recommend entering a home currency adjustment at the end of a reporting period, when financial reports need to show the current home currency value of foreign balances. Others recommend recording a home-currency adjustment more often, such as quarterly, immediately following an unusually large transaction, or on some other criteria unique to your business. Depending on when an adjustment needs to be made will be based solely on your business needs. I'm including the steps to make an adjustment below: 

 

  1. Go to the Company menu.
  2. Click Manage Currency, and then click Home Currency Adjustment.
  3. Select the currency you'd like to enter the adjustment for. You can make adjustments for only one currency at a time.
  4. If necessary, update the currency's exchange rate. QuickBooks uses this rate to recalculate your home currency balances. By default, QuickBooks uses the latest exchange rate listed in the currency list.
  5. Click the Calculate Adjustment button. QuickBooks displays the balances you have for accounts in the selected currency.
  6. Tap the checkmark column to select the accounts to make adjustments for and then save the transaction.
     

Additionally, this guide provides an overview of how to handle different currencies in QuickBooks Desktop: Set up and use Multicurrency. 

 

For your second question, since the transactions coming in are in euros, we can create Transfer Funds to move the money from your Euro account to the US. Here's how:

 

  1. Go to the Banking menu and select Transfer Funds.
  2. From the Transfer Funds From section, select your Euro bank account.
  3. In the Transfer Funds To, select your US bank account.
  4. Choose the Transfer Currency and enter the Transfer Amount.
  5. After that, click Save & Close.
     

Moreover, you can consult your accountant for further guidelines in recording complex transactions as they have a broader knowledge of recording and managing your accounting transactions.

 

Please don't hesitate to let me know if you have any additional questions or concerns. Take care and have a wonderful day ahead! 

Z
zoe478Author
May 9, 2024

Thank you for your help but it didn't really answer my question. I understand how to create the transactions but I can't figure out how to deal with the difference between what I thought would be transferred and what was actually tranferred.

I used transfer funds and requested 55,000 euros be transferred from our German bank account to our US checking account. I used the exchange rate of 1.0641 on the date of transfer. I got this from Investing.com. I expected that the amount in USD would be $58,525 less some bank fees. However, the amount actually received at our US checking account was $56,866. I am puzzled about this huge discrepancy and don't have a clue how to account for it.

Thanks for your help.

S
ShyMae
May 9, 2024

Hi there, zoe478. I'd also be confused if I would experience the same case. Let's break down the situation and explore possible reasons for the difference between the expected and actual transferred amounts.

 

When there's a discrepancy in transferred amounts, there could be several reasons for it. One probable cause is exchange rate fluctuations. The rate you obtained from a financial website might not have been the same as the bank's actual rate during the process.  

 

Additionally, international transfers through banks often come with additional fees that can vary depending on the financial institution, the type of transfer, and the amount being transferred. You can check your bank's fee schedule to determine if there are any additional charges. 

 

It's recommended to make adjustments to ensure the accuracy of your books and transactions at the end of the year. You can follow the steps provided by my colleague above. It's also advisable to consult your accountant for other options and advice. You can utilize our Find an Accountant tool if you don't have one.

 

I'm adding these informative articles that serve as a comprehensive guide to managing your accounts and transactions in QuickBooks Desktop: 

 

 

The information and recommendations I have provided will enable you to record your transactions accurately without any confusion. If you have any further questions regarding this matter, feel free to post a reply. I'm always here to assist you. 

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