Representing Multiple Currencies in Double Entry Bookkeeping?

I%26#039;m not interested in any packages or software, just how this is done conceptually.

If I bill European clients in euros where I normally use US$, how does the exchange rate work when putting together a transaction.

For example: I invoice Company A for E2000. I get a transaction like

Sales - CR $2400

Invoices Payable (Euros) - DB E2000

Then they settle up with me

Invoices Payable (Euros) - DB E2000

Cash at Bank - CR $2200

The exchange rate changes all the time - and as it stands I%26#039;ve lost $200 here - how do you get these figures to balance?

I%26#039;m not an accountant, and I have magical software to actually do this for me, but I%26#039;m trying to understand how double-entry bookkeeping works, so I%26#039;d like to know :)

Thanks in advance.

Representing Multiple Currencies in Double Entry Bookkeeping?credit score

Just remember double entry doesn%26#039;t mean only two lines - it means two sides to the entry. Ignoring actual exchange rates, the entry would be something like this:

Sales $2400 CR

AR 鈧?000 DR

Payment goes

AR 鈧?000 CR

Cash $2200 DR

Loss 200 DR

Loss would be named, perhaps, gain/loss on exchange rate. You can either net them, or debit a loss account, and credit a gain account. Hope that helps.