How to Adjust Base Currency?

Base Currency Adjustments

There is always a little amount of risk involved while transacting with customers dealing with foreign currencies. This risk is due to the fluctuation of exchange rates on a daily basis. Most of the times it is a profitable transaction, except for a few unlikely days of bad exchange rates.

In Zoho Books you can have an insight on the profit or loss incurred due to the change in exchange rates and also can apply the changes to open transactions.

Let us consider a scenario:

In this case, you need to adjust the base currency rate with foreign currency and have an insight about the profit/loss. You can change the rate for the open transactions with foreign currency.

How to Adjust Base Currency?

To adjust the base currency in Zoho Books:

Base Currency Adjustments Base Currency Adjustments

The exchange rates used are just for the purpose of an example.

Fill in the following fields:

  1. Currency: The currency for which the adjustment needs to be made according to the changed exchange rate.
  2. Date of Adjustment: Set the date on which you wish to have the adjustment made.
  3. Exchange Rate: Set the new exchange rate of the foreign currency to the base currency of your organization.
  4. Notes: Fill in the reason on why the adjustment is being made.

P.S: We recommend you to have an accountant or a bookkeeper to have the adjustments made according to the date.

Note: Open transactions are very much mandatory to make base currency adjustments.

Confirm Adjustment

After creating an adjustment, the page will have the following fields:

Fields Description
Account The account which is affected due to the change in exchange rates.
Balance (FCY) In this case the FCY is in Euro (EUR).
The total amount present in FCY.
Balance (BCY) In this case the BCY is in USD. The total amount in BCY with the previous exchange rate.
Revalued Balance (BCY) The total amount in BCY after the new exchange rate is adjusted and revalued.
Gain or Loss (BCY) This column shows whether you have made profit due to the change or incurred a loss. An amount with a negative sign will depict the loss incurred.

FCY: Foreign Currency
BCY: Base Currency

Reports

As soon as the adjustment is made, the particular account will be updated with the new values in the Reports section.

You can check the reports through the following steps:

The following reports along with the particular accounts will be changed with repect to the base currency adjustments:

Business Overview

Report Account
Profit and Loss Non Operative Income/Expense (Exchange Gain or Loss)
Balance Sheet Current Assets (Accounts Receivable)

Accountant

Report Account
Account Transactions A entry with Base Currency Adjustment as type will be created.
Journal Report A new section will be created with the date and title as Base Currency Adjustment.
Trial Balance Assets (Accounts Receivable)

Currency

Report Account
Realized Gain or Loss Transaction Type: Base Currency Adjustment

####Deleting the adjustment: The base currency adjustment can be deleted by selecting the entry from the Base Currency Adjustment and clicking on the Delete option.

Delete Adjustment


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