Currency Adjustments

Currency Adjustments

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Hello,

I'm not an accountant.

In a multicurrency accounting system I know its neccesary to do a currency adjustment at the end of a period to calculate the precise net worth. I know from research that the accounts that are included in the adjustment are Supplier Balances (Accounts Payable) , Customer Balances, Credit Card Balances, Bank Accounts. Why isnt the non deposited funds account included in this adjustment? Or am I missing something?

Designer_Analyst

Replies (2)

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Chris Caspell CTA TEP
By ccaspell
23rd Oct 2007 17:59

What is a 'non-deposited funds account'?
Is this simply the cash (assumably a foreign currency) that you have in your hand prior to paying it into a bank?

The idea behind currency adjustments is all the accounts should be shown in one currency. The balance sheet is a snap-shop of all accounts at a particular date, including bank, credit card and cash in hand and should show the value of the money held at the exchange rate at that date. You should not need to make any adjustments to Profit and Loss accounts as your system should record these at the relevant exchange rate when the transaction is entered.

As an example, if you held US$200 at a particular date and at that date the £ = 2 x US$. This means that you should have £100 in your accounting system. If, in fact, you have £110 in your account you will need to remove £10 as a currency loss and post it to the exchange differences account.

I hope that helps.

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By User deleted
25th Oct 2007 10:46

The Answer
Thank you Chris.

The non deposited funds account is money not yet deposited at the bank. I have got my answer - everything liquid should be revalued by the Currency Adjustment.

Do you know of a decent online forum where I can get information on European VAT systems?

Thanks

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