Accounting Currency
Accounting Currency refers to the monetary unit of measure that is the basis for measuring income, expenses, assets, liabilities, and equity of a company.
These accounts are used when preparing a company’s financial statements. A specific Accounting Currency is also used during the daily recording of business transactions of a company. In the case of a multi-national company, the sales of a company may be accepted in the currency of the country in which the sale is made.
Once the sale is made, it is translated into the Accounting Currency of the company’s books. An example of this would be a UK company keeping its books in GBP. Since the company keeps its books in GBP, it will need to use the GBP as the currency the financial statements are then recorded. If the company makes a sale in Switzerland, the sale would be recorded in Swiss francs. Likewise, if a sale was made in France the sale would be recorded in Euros. The accountants of the UK based company would then convert the sale in Swiss francs and Euros to GBP using the interbank exchange rate. Once this was done, the international sales would then be recorded on the books in the Accounting Currency, or GBP. With this done, the financial statements are measured in one currency, the Accounting Currency.
