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Hi. Just wondering if someone can add to the page "Accounting for foreign currency transactions" a section on purchasing USD. Thanks!
Hi Susan!
I'm not quite sure I am 100% understanding what you are looking for, but I'm sure going to try! Are you attempting to purchase US dollars in cash? Or are you making a purchase in US dollars and trying to enter the purchase in AgExpert?
Generally speaking, purchasing is a direct conversion to CAD on the day that the purchase was made. If you purchased using a CAD bank account or credit card, then the conversion is done for you when the item clears. This includes buying US dollars. You would withdraw from your bank account, in the amount that was withdrawn to purchase the money. You would then offset that to Personal Draws/Shareholder's Loan.
If you are purchasing in US cash, then you can use the exchange account for the day to make the entry into AgExpert. For example, if you purchased and item for 10.00 USD, and used US cash to do so, then you would do a zero-dollar withdrawal (the same as if you were purchasing using CAD cash). If the exchange rate for the day is 1.25, then the expense will be 12.50, and it will offset to Personal Draws/Shareholder's Loan
.
The Foreign Currency Transaction article goes a little deeper than this, in that it deals with when you have a bank account that reports in USD, rather than CAD. The idea is that you can't report apples (CAD) and oranges (USD) on the same set of financial statements. In Canada, all accounts must be reported in Canadian currency. So we have to take steps to make sure the US dollar account is reported in Canadian currency, per law.
I hope I've answered your question a little bit, anyway. Let me know if you have any other questions!