Dollar Trading..
System
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In my workplace we currently trade in dollars and sterling -my query is with regards to the correct treatment of buying in dollars and the ever changing exchange rate.
Say we buy dollars in to our dollar bank a/c @ $1.77, we then purchase some goods from a supplier of the dollar price list set out by the supplier. Even though we are trading dollar for dollar the supplier may state an exchange rate of $1.73.
Our current a/c system can not trade in dollars so we have to convert everything to sterling with a relevant exc rate at the time of purchase.
My thought is that we should be using the rate we buy the dollars in @ i.e. $1.77 as this is effectively what we are paying.
Sorry if I have confused u by reading this, but any help would be appreciated.
Many Thanks
Leanne
Say we buy dollars in to our dollar bank a/c @ $1.77, we then purchase some goods from a supplier of the dollar price list set out by the supplier. Even though we are trading dollar for dollar the supplier may state an exchange rate of $1.73.
Our current a/c system can not trade in dollars so we have to convert everything to sterling with a relevant exc rate at the time of purchase.
My thought is that we should be using the rate we buy the dollars in @ i.e. $1.77 as this is effectively what we are paying.
Sorry if I have confused u by reading this, but any help would be appreciated.
Many Thanks
Leanne
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Comments
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Re:Dollar Trading..
You say that your accounting system cannot trade in dollars so am I correct in assuming that your dollar bank account is converted to sterling at the time of dollar purchase? If this is so, then I would process the supplier invoice at the same rate as the dollars purchased to cover it as this is the real cost of purchase.0 -
Re:Dollar Trading..
Hi TLG, Thanks for your reply - yes you are correct we purchase the dollars with money from our sterling current a/c @ a fixed exchange rate which can be brought up to a month in advance. Our dollar a/c on our accounts package is shown in sterling and is re-valued at the end of the month to show the exchange rate on that day i.e. 31/03/06 rate of $1.76 as per the bank of England.
So like you say I do believe we should be using the rate we buy the dollars at when converting the dollar value of goods to sterling on our accounts package.
Thanks very much for your help to clearing this up :P
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