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What to know about exchange rates

Exchange rates and currencies

In QuickBooks, exchange rates are always recorded as the number of home currency units it takes to equal one foreign currency unit. The foreign unit is always 1 and the amount of home units that equal that 1 foreign unit is what QuickBooks uses as the exchange rate.

The home currency is the US dollar (USD), the foreign currency is the Canadian dollar (CAD), and the exchange rate is 0.99160. Because the foreign currency is always 1 unit, one Canadian dollar equals 0.99160 US dollars.

Multicurrency rates

Exchange rates and transactions

There are two values for foreign transactions:

  • The value in the foreign currency for the customer or vendor.
    The foreign value is calculated by multiplying the items or services in the transaction by the exchange rate.
    Note: If you use price levels, the line item's price is driven by the price level and the exchange rate is ignored.

  • The value in your home currency.
    The home currency value is calculated by multiplying the total amount of the transaction by the exchange rate.

  • When you change the exchange rate on transactions, the foreign value stays the same and the value in your home currency changes. To update the foreign price after changing the exchange rate, go to the Edit menu, click Delete Line to delete the line item, and then enter the line item again. QuickBooks uses the updated exchange rate for the line item you enter.

Convert exchange rates

QuickBooks automatically converts foreign amounts to your home currency in transactions and reports. You can also use the currency calculator to calculate exchange rates.

  • Some Web sites provide exchange rates as 1 home currency = X foreign units. Because QuickBooks uses the opposite formula of 1 foreign unit = X home units, you may need to convert rates for use in QuickBooks.

    To convert rates, use the following calculation.

    If 1 home = X foreign, divide 1 by the X foreign rate to determine how many home units in 1 foreign unit:
    For example:
    If 1 USD = 1.06729 CAD, then
    1 (USD) / 1.06729 (CAD) = 0.936952,
    so 1 CAD = 0.936952 USD

  • If you know the foreign and home total amounts and need to determine the exchange rate, divide the home total amount by the foreign total amount to determine the exchange rate (how many home units equals one foreign unit).
    For example:
    If 1675.00 CAD = 1613.65 USD, then
    1613.65 (USD) / 1675.00 (CAD) = 0.963373,
    so 1 CAD = 0.963373 USD

See also

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