Accounting and currencies

[julieHB]

Hmm, i thought I'd have a little looksie into the accounting bit, trying to sort out what goes where (I know, I have been dreading it and have left it far too late).

So, the money comes into the Paypal account in USD. I never transferred it to my bank account, but used the money to buy other stuff, some of it in USD, some of it in GBP. My problem is, I don't have any Paypal currency conversion for the dollars entering my Paypal account, and none where these dollars have been used to purchase goods in USD. I only get the conversion rate if I use GBP from my bank account, or transfer money from Paypal to my bank account.

For your books, do you use an average USD-GBP conversion value for the whole year?

Anyone know what the best practise is?

[dinah46]

Spooky - I was just talking about this problem yesterday so really interested to see the answers.

[elburnzo]

From my studies i would suggest profit and loss account uses average rate and balance sheet uses rate at tht date. So use ave rate for the items youve bought etc and then transl ate the bal ance u have left using the current rate. Does tht make sense?

[Jay9]

Now that sounds really complicated Julie!  I've just been on the phone with my accountant this morning sorting out some last minute paperwork that she needs but nothing like that.

Hope you get it sorted OK. 

[nemeton]

I got in a real tangle with this when my Etsy shop opened, but eventually figured out how to handle it, with a LOT of help from my accountant! Now I do two separate monthly spreadsheets, one for dollars and one for sterling. I work out the incomings/outgoings for each month and total them. Then I use the 'historic exchange rates' from the HMRC website for the appropriate month and year to convert the dollar totals into sterling, and add/subtract those figures to/from my sterling ones. So far, touch wood, have never had a problem doing this and the tax folks have never queried it.

ETA: linky 
http://www.hmrc.gov.uk/exrate/index.htm

[julieHB]

Thank you both!!

I have such piddly little sums to deal with it's almost laughable - but I suppose it still needs to be right!! 

[dinah46]

That's what I thought Julie until last week when my dollar transactions outstripped my sterling , good old etsy

[julieHB]

Well done, Diane!! 

[dinah46]

Well done, Diane!! 

Now I didn't say it was a lot, just more than sterling

[LittleHen]

If you go to www.xe.com you can find the exchange rate for any historical date.  http://www.xe.com/ict/.
It might be easier to figure it out this way.
Best of luck!

[sparrow]

I worked out that if you go to the transaction in the Paypal history, click on detail, it tells you how many GBP it put into your account (after going through several months' worth of converting stuff .....sadly, for me, it was outgoing..........so it doesn't do that for incoming?

[julieHB]

I worked out that if you go to the transaction in the Paypal history, click on detail, it tells you how many GBP it put into your account (after going through several months' worth of converting stuff .....sadly, for me, it was outgoing..........so it doesn't do that for incoming?

Sabine, I couldn't find any of the info for USDs that had been put into the Paypal account d/t etsy sales, and that I had never transferred to my bank account. Sadly the money was used to pay other "stuff", so never got a straight conversion.

[nemeton]

I have two paypal balances (£ and $) anyway so it just seems easier to keep the two currencies separate and convert the totals