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VT Transaction+

Navigation: Multi-currency accounting

Behind the scenes

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Every currency transaction has a mandatory entry to a translation differences account held in the balance sheet. Whenever currency rates are changed, the base amount of each currency entry in the transaction is re-valued to the new rate. The translation difference entry is used to take up any imbalance.

When the rates are re-valued, any overall balance on the translation difference account at the date entered for the revaluation is transferred to the exchange differences account in the profit and loss account by means of an automatically created journal.

All transactions ever entered are re-valued, regardless of whether they are settled or not. If a currency invoice that has been paid is re-valued, there will be two equal and opposite changes made to the balance on the translation differences account which will cancel each other out.