Revaluate the Different Currency Account
Overview of Currency Revaluation
Currency revaluation is the process of adjusting the value of foreign currency-denominated monetary balances in your accounting records to reflect the current exchange rates. This process ensures accurate financial reporting by accounting for unrealized gains or losses due to fluctuations in currency rates.
This guide explains how to perform currency revaluation in your system, both automatically and manually, based on your configuration and business needs. The goal is to ensure that your foreign currency account balances accurately reflect current exchange rates, showing any realized or unrealized gains/losses for transparent financial reporting.
1. Automatic Currency Revaluation
Enabling Automatic Revaluation
Navigate to: Setup → Preferences → Automatic Revaluation Currency Accounts
Turn ON the toggle for automatic revaluation.
When enabled, the system will automatically check and update currency account balances when foreign currency transactions (such as bank receipts/payments) are entered.
How It Works
As you record transactions in a currency other than your base (reporting) currency, the system compares the exchange rate at the time of entry with the current rate.
If there is a difference, the system generates a journal entry to record the exchange gain or loss.
These journal entries appear as "Currency Revaluation" adjustments in your accounting records, linked to the affected currency accounts (e.g., bank, receivables, payables).
No manual intervention is required—entries are created and posted automatically each time a relevant currency transaction occurs.
Benefits
Minimizes manual work and reduces the risk of missed revaluations.
Keeps your currency balances up to date with minimal effort.
Helpful for companies with frequent foreign currency transactions.
2. Manual Currency Revaluation
When to Use Manual Revaluation
For scheduled revaluations at defined intervals (e.g., month-end, year-end, or even weekly snapshots).
For businesses preferring control over timing and memo/description details for each revaluation entry.
How to Perform Manual Revaluation
Go to Banking → Revaluation of Currency Accounts.
Select your desired end date (the effective date for the revaluation calculation).
Enter a memo or description if you want to annotate the revaluation (useful for audits and tracking).
Confirm and submit: The system will generate a journal entry reflecting the updates required to align your currency account balances to the specified date's exchange rates.
Key Points
The manual revaluation process creates a clear audit trail and allows personalized descriptions for each entry.
You control the timing: run revaluations any time to match your reporting cycles.
Journal Entry Example (for Both Methods)
Date: Revaluation effective date (selected by you or system date for automatic mode)
Memo: Custom description (for manual revaluation)
Accounts Involved: Currency accounts (e.g., foreign bank accounts), offset accounts (exchange gain/loss)
Amount: Calculated exchange difference on open balances
USD Account Revaluation Example
Suppose you have a USD bank account:
USD Balance: $2,000
Previously recorded at exchange rate: 1 USD = 0.90 EUR
Current rate at period-end: 1 USD = 1.00 EUR
Original EUR Value: EUR
Revalued EUR Value: EUR
Unrealized Gain: EUR
| Account | Debit (EUR) | Credit (EUR) | Description |
|---|---|---|---|
| USD Bank Account | 200 | Increase in value at new exchange rate | |
| FX Gain/Loss (P&L) | 200 | Unrealized gain from USD account revaluation |