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Track inventory purchased in one currency and sold in another

The user purchases inventory from a vendor that only deals in one currency, while the inventory is resold in another currency.


A company purchases their inventory from a Vendor that deals in Euros, but they resale this inventory in US Dollars.
Solution Description


  1. Set up the company file for multicurrency.
  2. Create a bank account from which to purchase/sell the inventory.
  3. Create/edit the item(s) to reflect the cost in one currency, and the sales price in another currency.
  4. Assign a currency to the vendor/customer from which the inventory is purchased/sold.
  5. Creating the bill.
  6. Paying the bill.
  7. Creating the invoice.
  8. Receiving Payments.


Solution Details

  1. Set up the company file for multicurrency.
    1. Important: Prior to following these steps, make a backup of the company file. Once your Home Currency is selected, the selection can NOT be undone.
    2. Go to the Edit menu, and choose Preferences.
    3. From the list of preferences, select Multiple Currencies.
    4. Select the Company Preferences tab.
    5. For Track multiple currencies in this company file? select Yes, I use more than one currency.
      Click Yes to the pop-up window warning.
    6. Select the home currency you use in transactions, from the drop-down menu.
      Note: If you normally track everything in US Dollars, you will want to choose it from the available options.
    7. Click OK, to save the changes.
    Back to top.
  2. Create a bank account from which to purchase/sell the inventory.
    In QuickBooks, each currency, used in transactions, will require its own bank account. This is necessary as exchange rates can change the value of currency.
    To create the bank account:
    1. Go the the Lists menu, and select the Chart of Accounts.
    2. In the Chart of Accounts, click on the Account button, located in the bottom-left corner of the window.
    3. Select New. This will open the Add New Account wizard.
    4. On the first page of the wizard, select Bank from the list of account types, and click Continue.
    5. Enter the Account Name.
      Note: To help differentiate between each currency, you can enter the currency in the name of the account name, or in the Description field.
    6. From the Currency drop-down menu, select the currency for this account.
    7. Enter the remaining account information (Optional), and click Save & Close.
      Choose Save & New, for an quick way to create accounts for any additional currencies.

      Note: You should end up with at least one bank account for your Home Currency, and an additional account for each alternate currency.
    Back to top.
  3. Create/edit the item(s) to reflect the cost in one currency, and the sales price in another currency. QuickBooks's multicurrency function can only be applied to the names lists and accounts. Because of this, there is no option in the item setup to associate cost and sales price with a specific currency.

    To setup the item so that it can be bought in one currency and sold in another:
    1. Go to the Lists menu, and select the Item list.
    2. In the Item List window, click on the Item button, in the lower-left corner, and choose New.
      If the item already exists, choose Edit.
    3. Enter the information for this item.
    4. When entering Cost and Sales Price, take note of the fact that the 2 fields do not have an option of the currency in which the rate is stated.
      • If an item is purchased in one currency (like Euros), the rate entered in the Cost field should be entered as if it were in Euros.
      • If an item is sold in a different currency (like US Dollars), the rate entered in the Sales Price field should be entered as if it were in Dollars.
    5. Click OK, to save the item.
    Back to top.
  4. Assign a currency to the vendor/customer from which the inventory is purchased/sold.
    1. While creating a vendor/customer, click on the Currency drop-down list.
    2. From the list, select the currency with which you deal with that vendor/customer.
      Important: Once you have assigned a currency to a customer/vendor and enter a transaction, you will not be able to change the currency. It is recommended that you perform a backup prior to taking these steps.
      Note: Once a customer or vendor is saved with a foreign currency, QuickBooks will create an Accounts Payable or Accounts Receivable (respectively) for the associated currency. This will appear in the Chart of Accounts.
    Back to top.
  5. Creating the bill.
    When creating a bill while using the Multiple Currency feature, it is crucial that close attention is paid to the transaction.

    To create the bill:
    1. Go to the Vendor menu, and select Enter Bills. This will open the Enter Bills module.
    2. First, select a name from the Vendor drop-down menu. Once the vendor is selected, QuickBooks notes the currency, with which the do business, to the right of the vendor's name.
    3. Now, select the A/P Account that corresponds with the vendor's preferred currency.
      Once you select the A/P Account, you may notice that the Amount column header changes to show the currency in which items will be listed.
    4. You may now fill out the detail of the bill.
      Note: As mentioned in Step 3, the Cost of the item will appear as it was entered in the item's setup. What determines the currency in which the Cost is listed, is the Accounts Payable that has been selected for this transaction.
      Note: If you have entered a preferred vendor for an item, or if you have selected the item first and then the vendor second, you will get the following message:
      1. Click OK to the Edit Item Rate pop-up message. This is a warning that the incorrect cost was entered into the bill.
      2. Select the line item and delete it (CTRL + Delete).
      3. Reenter the line item. This will enter the line item with the correct cost.
    5. Once the bill has been filled out, you will need to set the exchange rate as of the time of the transaction. This is used to properly record the average cost of the item(s) in your Home Currency, as well as record an expenses.
    6. Click Save & Close.
    Back to top.
  6. Paying the bill.
    1. Go to the Vendor menu, and select Pay Bills. This will open the Pay Bills module.
    2. Select the A/P Account from the drop-down list. This will only show bills that use the selected currency.
    3. Select the bills you wish to pay.
    4. Now, click on the Account drop-down list, and select the Bank account that uses the same currency.
    5. Click Pay Selected Bills.

      You have now paid the bills using the foreign currency.
    Back to top.
  7. Creating the invoice.
    1. Go to the Customer list, and select Create Invoices. This will open the Create Invoices module.
    2. Select the Customer:Job from the drop-down options.
      The currency, in which the customer deals, will appear to the right of their name. The Account will also change, to match the customer's currency.
    3. Fill out the details of the invoice.
    4. Enter the Exchange Rate at the time of sale.
    5. Click Save & Close
    Back to top.
  8. Receiving payments
    Receiving payments does not require any extra steps as everything will change automatically after selecting the customer.
    Back to top.

If this solution does not resolve the issue, please review other available QuickBooks support options for additional guidance. You can also read and post messages relating to your issue on the QuickBooks Community forums.

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KB ID# SLN43491
10/22/2016 9:10:47 AM
PPRDQSSWS407 9138 Pro 2017 becd13