I've started an online business dealing in mobile apps. I have set it up as a Ltd company for risk mitigation reasons primarily. I am just starting to put my books together and I want to get things right from a bookkeeping perspective.
One transaction is to an online hosting service the amount that has actually debited my account is £14.90 however as this was transacted in the US the description shows:
USD 22.90
VRATE 1.6474
FGN Fee 1.00
How should I use this information and do I need to factor it into my bookkeeping? Or do I just ignore it and focus on what's actually debited my bank account. I have a lot of foreign transaction of a similar nature so I feel as if I should be doing something with this data.
Gains and losses on foreign currency transactions are only applicable where there are timing differences in the transaction or where the foreign currency is being held (in cash or in a bank account not held in sterling).
For the case of your transactions you would record two seperate things.
1) The sterling amount of the cost related to the purchase
2) The sterling amount of the fee's associated with the purchase.
The reason for holding them seperately is that a common convention is that the cost of the service is a cost of sales where the fee's are an expense (that latter point can cause a debate all on its own but lets keep it simple for now).
You must of course keep all of the data relating to the transaction but the double entry is as mentioned above relatively straight forwards.
HTH,
kind regards,
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
