Currency Handling and Double Entry Bookkeeping


Table of Contents
Currency Handling and Double Entry Bookkeeping
How to set up a foreign-currency account
ISO Currency Codes

Currency Handling and Double Entry Bookkeeping

A Double Entry bookkeeping system stores both values, and requires that all transactions balance, as described in the Double Entry Identity.

When we introduce the notion of having multiple currencies, or stocks that may vary in price, the identities get a little more complicated, and we introduce the following formulae:

Thus, buying a widget in Japan (JPY) and using US Dollars (USD) to pay for it would appear thus:

The engine links together all three of these values (1.0, 150, 0.00667) permanently and makes it impossible to change one without changing another, so that the grand total is always zero, thereby guaranteeing satisfaction of the double entry accounting identity.