Set Up Accounts for FX Revaluation & Fx Translation
Foreign exchange (FX) revaluation is a necessary process for organizations that operate with multiple currencies. This procedure helps ensure that financial statements accurately reflect the current value of foreign currency transactions, including open invoices and vendor bills.
Set Up Accounts for FX Revaluation
To set up accounts for FX Revaluation:
Click the company icon in the top right corner of the screen.
Go to Organization Settings > Accounting.
Under the Multi-currency section, turn on the toggle to enable multi-currency functionality and input the required information.
Field Guide
AP & AR Revaluation Start Date
Define specific dates for foreign currency revaluation to begin, which is particularly important for accounts payable (AP) and accounts receivable (AR).
Realized FX Gain/Loss
Select an account from the chart of accounts to record realized gains or losses from foreign exchange transactions. This account will include all gain/losses on bills and invoices that are no longer open.
Unrealized FX Gain/Loss
Select an account for recording unrealized gains or losses, which are adjustments based on current exchange rates for transactions not yet settled.
Accounts Receivable Revaluation
Choose a dedicated account for reflecting any revaluation of accounts receivable due to changes in FX rates. This will be be a separate balance sheet account from Accounts Receivable.
Accounts Payable Revaluation
Select an account designated for revaluation of accounts payable in response to foreign exchange rate fluctuations. This will be be a separate balance sheet account from Accounts Payable
Cumulative Translation Adjustment
The Cumulative Translation Adjustment (CTA) is an entry in the equity section of a company's balance sheet that accounts for foreign currency translation gains and losses. It arises when a company has foreign subsidiaries whose financial statements are translated into the parent company’s reporting currency.
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