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During month-end closing process, balances of the following accounts (if they are maintained in other currencies than the accounting currency) are revalued by using the current (month-end date) exchange rates:
- The Cash and Cash Equivalents section of COA: cash and bank accounts, the PDCs Received account.
- The Trade and Other Current Receivables section of COA: the Current Trade Receivables from Customers account, the Deposits Paid to Suppliers account.
- The Trade and Other Current Payables section of COA: the Current Trade Payables and Deposits from Customers accounts.
- The Staff Settlements (Liability) section of COA: the Staff Salary Settlements and Unpaid Employee Business Expenses accounts, the PDCs Issued account.
- The Staff Settlements (Assets) section of COA: the Prepaid Employee Business Expenses account.
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Example.
On June 30, the bank account has balance of 23000 EURO. had a balance of 23,000 EURO; the exchange rate with respect to the accounting currency (UAE Dirham) was 4.40. The balance in the accounting currency is 101,200 Dirham.
On July 10, the organization received a lump sum of 15,000 EURO for a completed project. The exchange rate actual on July 10 was 4.42. The received sum in the accounting currency was recorded as 66300 Dirham.
During month-end closing process it , the account balance is revalued in the accounting currency which is AED Dirham. The with the exchange rate of 4.45 in effect on June July 30 is 4. 52. The balance in the accounting currency is 103960 Dirham.169,100 Dirham.
The gain of 1600 Dirham is recorded. The gain is calculated as follows: (23000*0.05 + 15000*0.03) = 1600
Revaluation of accounts in other COA sections and calculation of gains/losses are performed on per document (transaction) basis. Notice that document amounts in the accounting currency are recorded to GL account with all the related information. For example, for accounts in the Payable and Receivable sections of COA such information includes: Entity, Company, Contract, and Document. For accounts from other sections of COA, the related information depends on the COA section.
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