Functional currency
In Arabic العملة الوظيفية
The currency a company keeps its books and reports in, into which every document in another currency is translated at an exchange rate.
In plain words
Customers and vendors may deal in many currencies, but the ledger needs one. The functional currency is the one the business mainly earns and spends in, and every balance, statement and tax figure reads in it.
A document in another currency keeps its own amount and also books a functional amount: its total times the rate on its date. Reports add up the functional amounts, never the mixed originals.
The common mistake is booking a foreign document at one to one when no rate is found. The ledger then treats 1,000 US dollars as 1,000 riyals, and nobody notices until the money is collected.
- Bill currency
- EUR
- Books currency
- SAR
- Bill total
- EUR 4,000.00
- Rate on the bill date
- 4.1000
- In the books
- SAR 16,400.00
In Axon Suite
How Axon Suite handles it
Each subsidiary keeps its books in its own currency in Axon Suite, and its reports read in it. A document in another currency with no rate on file and none typed is refused, never booked at one to one.
Feature
Documents in any currency
Each document carries its own currency and exchange rate. With no rate on file and none typed, the document is refused, never booked at one to one.
Open: Documents in any currency