Fred, thank you for your reply. I'm afraid that I don't quite follow the logic of your explanation.
To me, as far as I am aware, the P&L is, basically, 'How much in' minus 'How much out' equals a profit or a loss. A finalised transaction, surely, is set in stone - in this case 'Wood' at €150 cost me £132.27 on Thursday and was recorded as that in the journals. Come Monday, if the rate changes so that wood bought on the Monday now costs £128 does not mean I over-paid by £4.27. The price was correct at the time and now has changed, that is all. I have not gained or lost anything at all. I might think 'Hmm pity I didn't buy it today', but that is hindsight not accounting. Where I taking the figures from 'pen and ink' journals, the £132.27 and €150 would be recorded in the P&L as written in the journals. I can't see that I would hurry to find out the exchange rate and write £128 instead of £132.27 and then make a journal entry for £4.27 loss to balance the book. And that is just one entry, what if it were hundreds? If the P&L does not record the actual amounts, how can you ever come to rely on it. Suppose you had hundreds of items you could be £1000's of pounds out one way or the other if the rate changed on Monday and again on Tuesday, how would you ever know what your profit or loss actually was? When I was using Sage, the rate on the day was the rate recorded, it never changed if the following week when something else was purchased a different rate was applied. Apart from which, I always thought the Balance sheet is what was used to (re)valuate and this would support your reasoning - If my house was recorded as an asset of €250,000 and became €275,000 due to a rate change I'd be most please and may sell it; but if the revaluation showed it as €195,000 then I would not be so inclined. On Sun, 30 Jun 2024 at 12:27, Fred Bone <f...@mandfb.me.uk> wrote: > On 29 June 2024 at 22:05, G R Hewitt said: > > > Hello Everyone, > > > > Basics: > > GnuCash 5.6; MacOS High Sierra 10.13.6 > > Using Sterling as the base currency and Euros. > > > > The problem: > > A few days ago I bought something in euros (€150) and paid for it in > > sterling (£132.27) and the GnuCash system worked out that the rate was > > 0.8818. In the P&L the item was properly shown as £132.27. The card > > account payment showed £132.27 and the euro expense account showed > > €150.00. All well and good. > > > > I bought something else a few days later in the same manner as above, but > > the exchange rate had changed, all well and good too - card account and > > expense account transactions were correct. > > > > On running the P&L I noted that the £132.27 of the first transaction > > above was now less at around £128 and some pence instead of the expected > > £132.27. I checked the card account and it was still at £132.27 and the > > euro account was still at €150. > > > > Why is this and is there a way to have the correct figures shown in the > > P&L without them jumping up and down as the rate changes. > > Why? Because the P&L is a (re-)valuation at a specific date (e.g. > "today") and there's been an unrealised loss on your asset - the €150 is > now worth only £128+ whereas you paid £132.27 for it, and you haven't > accounted for this. (Of course, if the Euro subsequently rises enough > against sterling this might even be reversed and become a gain.) > > Consider what happens if what you bought was actual euros (such as in > preparation for a trip to France). They cost you £132+. If you bought > them today instead, they'd cost you £128+. You made a £4(+-) loss by > buying too soon. That's what the P&L is telling you. > > The figures ARE correct, at least insofar as you have informed Gnucash. > > > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
