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Note, that in FirstBIT ERP the same accounting currency is used by all the entities if multiple entities are enabled and created.

HoweverNational and accounting currencies can be selected on the Administration > Settings > Money form.

Generally, the exchange rates that measure the amounts of foreign currencies in terms of the accounting currency change over time, and the company must periodically revalue its assets and liabilities by using actual exchange rates.

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In case when accounting currency is not the national currency, you will need to determine the exchange rate of a transaction currency with respect to the accounting currency  (that is, cross rate) based on two other exchange rates:

• Exchange rate of transaction currency to the national currency
• Exchange rate of the accounting currency to the national currency.

Example. For a business, An American company is located in Dubai and has the US Dollar as its accounting currency. The national currency is Dirham, AED.

The current exchange rates for EURO to AED is 4.5 and for US Dollar to AED is 3.6.

To calculate the transaction amount of 1000 EURO in the accounting currency (which is the US Dollar), you need to multiply the transaction amount by the first rate (4.5 as the exchange rate of EURO in terms of the national currency, AED) and then divide by the second rate (3.6 as the exchange rate of the US dollar in terms of AED)perform the following operations:

1. Calculate the cross rate of the EURO to the accounting currency (US Dollar).
   4.5/3.6 =1.25
2. Multiply the transaction amount, 1000, by the cross rate, 1.25. The resulting amount is $1250.

Calculation Options

The gains or losses resulted from fluctuations of exchange rates (that is, exchange differences) can be calculated in the following two modes:

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To switch between these calculation mode, you can use the Calculate Exchange Rate Differences on Month Closing Only option on the Administration > Settings > Accounting form.

To include this the calculation of exchange rate differences in the month-end closing process, you can need to select the Calculate Exchange Rate Differences option on the Accounting > Service Tools > Month-End Closing form. You can review the results of the calculation and corresponding journal entries in the generated Month-End Closing document when you click the button. For more information on month closing, refer to Month-End Closing Service Tool.

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