Please note that here we are dealing with the currencies of non-hyperinflationary economy.īefore we even start with the explanation, I need to remind you that there is a BIG difference between the functional and the presentation currency:
Change currency in quickbooks estimates how to#
In this article I would like to show you how to deal with the change in your functional currency and I will also try to address a few practical questions related to such a change. Hmmm, that smells like a change in the functional currency.īut, it does not need to be something you should worry about. However, the main and only customer of our client changed during the period due to some group structure changes.Īs a result of that change, our client was making purchases of raw materials in EUR, but 100% of its sales were made in GBP because the new customer insisted on GBP pricing.
In the past years, the company was simply buying materials from its parent, made semi-finished products locally and then sold these semi-finished products to another company in the group.Īpparently, the group was simply using the local company as a production factory due to lower labor cost.Īll was fine – both purchases and sales were made to companies in EUR in the past. There were loads of transactions in a foreign currency and resulting impact of constant conversion to the local currency on profit or loss was huge.
Change currency in quickbooks estimates trial#
When we received the trial balance of that client, we spotted something strange: Some time ago I was a part of an audit team auditing the financial statements of a medium-sized manufacturing company.
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