Realised and unrealised exchange differences
You will be able to: Define realised and unrealised exchange differences; Post a foreign-currency settlement and find the gain or loss; State what Zeyto does and does not do at period end.
- Read not done yet
- Self-check: not taken not done yet
- Lesson complete not done yet
When you invoice in a foreign currency, you book the receivable at the rate of the invoice date. When the customer pays, the rate is usually different. The gap is an exchange difference. It is realised when the invoice is actually settled. It is unrealised when you only measure open balances at a reporting date.
Realised: what Zeyto posts
When you enter a receipt or payment voucher in a foreign currency, the voucher has its own rate. Zeyto clears each invoice at the rate it was booked at, converts the money at the voucher rate, and posts the gap to the account Realized FX Gain/Loss (code 4910). If the rates agree, no such line exists.
| Settlement | Base paid or received compared with the book value | Result |
|---|---|---|
| Customer receipt | More base received | Gain |
| Customer receipt | Less base received | Loss |
| Supplier payment | More base paid | Loss |
| Supplier payment | Less base paid | Gain |
Tiny differences are rounding
A settlement difference of 0.01 or less in base currency is posted to the Rounding Difference account (4920) instead of Realized FX Gain/Loss. You can change this limit in Settings ▸ Posting Controls, under Foreign-currency settlement, rounding (between 0 and 1). At 0, every difference goes to FX gain or loss.
Unrealised: what Zeyto does not do
At 31 December you may hold a USD receivable booked at 3.6725 while the closing rate is different. Accounting standards expect open foreign balances to be restated at the closing rate, with the difference in profit or loss. Zeyto does not post this revaluation for you: open foreign-currency items stay at their booking rate until they are settled. Any period-end adjustment is a manual entry decided by your accountant.
Try it in the demo
- Open Accounting ▸ Chart of Accounts and search for 4910 Realized FX Gain/Loss and 4920 Rounding Difference.
- Open Settings ▸ Posting Controls and read the card Foreign-currency settlement, rounding. Do not save.
- Open Reports ▸ General Ledger, pick account 4910, and see whether any foreign-currency settlement has hit it.
Public demo company, sign in as admin / demoAdmin123. Data refreshes nightly.
- Realised differences arise at settlement and are posted automatically to 4910.
- Receipts: more base than booked is a gain. Payments: more base paid than booked is a loss.
- Differences up to the threshold (default 0.01) go to Rounding Difference.
- Zeyto does not revalue open foreign balances at period end; that is a manual accountant decision.
Check yourself
5 questions on this lesson. Not timed, not the exam, and you can try again. Score 60% or more, and read the lesson, to complete it.