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How to use Multi-currency & Forex Voucher In Tally.ERP 9?

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Due to Globalization, Business are trading Internationally & May require to use more than one currency for trading.Suppose you own an Indian business, and have a trade agreement with a USA business,Then your trading currency on your trade agreement may be in US Dollar.

As an Indian businessman your transactions are in INR locally. In such case  Multi-currency in Tally.ERP 9 is handy feature to Manage International trade and keep track of International receivables & payables.

The Main Advantages of Multi Currency in Tally.ERP9 are.

  1. You can Create Unlimited Foreign Currencies
  2. You can Pass Transactions in Multi Currencies.
  3. Can View Reports like profit& Loss account Balance sheet in Multi currency.
  4. Automate calculation of Forex gain/ loss

What is Forex Gain or Loss

By telling that Automate calculation of Forex gain/loss, now it is necessary to explain What is Forex gain or loss.

I will explain this with simple example.

Example:On 01-05-2016 ABC Ltd is selling Commodity to a Foreign Company  XYZ Inc $10000.00 on 30 days credit considering the current date  Exchange Rate of INR 50 for 1 USD.On 30-05-2016  ABC Ltd receives $ 10000 in their Dollar bank account. and the exchange rate on that day was INR 55 for 1 USD.

Forex calculation:

Exchange rate of USD on trading date : 1 USD = 50 Hence 10000 USD = INR 500000.00

Exchange rate of USD on receipt date : 1 USD = 55 Hence 10000 USD = INR 550000.00

Forex Gain                                                                                        =   50000.00

In the same manner when Exchange rate decreases, the seller may experience Forex Loss.

Hope you got an idea bout Forex Gain & Loss.

How to activate Multi-currency in Tally ERP 9?

To activate multi-currency go to.

  • Gateway of Tally > F11 Features.>F1 Accounting features
  • In Accounting feature screen Enable  Allow multi-currency : Yes

Multi-currency in Tally ERP 9

Press enter and save the screen.

Creating Currencies.

Go to Gateway of Tally > Accounts Info> Currencies >Create

  • Symbol: Enter the symbol of currencies, here I am using  USD Symbol $
  • Number of decimal places: Normally 100 cents is = 1 US Dollar, hence we require only 2 decimal place to enter up to 0.99 cents
  • Show amounts in Millions: If you set to yes 10,00000.00 will be shown as 1 Millions.
  • Is Symbol suffixed to amounts:  Yes, then amount will we displayed as $10000
  • Put a space between Amount and symbol: if set yes, Tally will put a space in between amount and symbol like $  10000
  • Word used to print decimal portion of the amount: The decimal portion of USD is cents.
  • Decimal places for printing amount in words: 2  two decimal place should be printed.

Currency creation

Press Enter and save, Now Currency has been created.

Defining Rate of Exchange

By altering Currency you can define rates of currency exchange on  various dates. To do this

Go to Gateway of Tally > Accounts Info. > Currencies > Alter

In this screen you can define different exchange rate for different dates.

Before doing that you must know some terms of currency used in Tally.ERP 9 for better understanding the rate of exchange.

  • Standard Rate :  Standard rate is the current rate of currency prevailing in the market
  • Selling Rate : Selling rate is the rate of currency in which you are selling currency to your banker.
  • Buying Rate: Buying rate is the rate at which you are buying currency from bank

Enter the Date of exchange in each date as shown in the image below.

Currency alteration

To Define Exchange rate for Multiple currencies

You can define currency rate for multiple currencies on a single screen do the following.

Go to Gateway of Tally > Accounts Info. > Currencies > Rates of Exchange

Define exchange rate for multiple currency on a single screen

Creating Party Ledger with Foreign Currency

Gateway of Tally >Accounts Info>Ledger > Create

To maintain Multi-currency in Tally ERP 9,You must have lparty ledger a foreign currency,

In the currency of Ledger field choose USD as currencyParty Ledger creation with foreign currencyCreate  a sales Ledger.

Gateway of Tally >Accounts Info>Ledger > Create

Here you cannot change the currency of ledger.

Sales ledger

Creating Bank Account

Gateway of Tally >Accounts Info>Ledger > Create

Keep Your currency of bank account, You can choose INR or USD in which you are dealing with bank.

Bank Ledger creation

Multi-currency Transaction

Sales transaction in Dollar

On 01-04-2016 ABC Ltd sold 100 Pcs of goods $100/ Nos  to XYZ Inc ( Foreign company)  the exchange rate on the date was 55/$

Lets enter this transaction.

Gateway of Tally>Accounting Voucher>Sales

  • Choose the date by pressing F2 and enter date 01-04-2016
  • Party’s Account Name : Xyz Inc
  • Sales Ledger : Sales  Name of the ledger we have created.
  • Name of item : Enter the item name here.
  • Quantity : Here 100 Nos
  • Rate: $ 100  enter with dollar symbol.

Rate with symbol

Press enter ,When cursor is on ‘No’ field, press enter again  Forex rate of exchange column will displayed.

Rate of exchange

This is the  rate  we have defined on 01-04-2016 in voucher alteration screen as selling rate above.

You can override this rate by typing a new rate of exchange here.

The final sales voucher will look like this.

Sales voucher with dollar

Press enter and save.

Receipt transaction in dollar

On 01-05-2016 Received $10000 from XYZ Inc, and the Exchange rate on the date was $ 60, refer rate of exchange defined above.

Gateway of Tally>Accounting Voucher>Receipt.

Account : Enter the bank account in which you are receiving dollar.

Particulars : Enter Party name from which you are receiving dollar.

Amount: In the amount field type exactly $10000  and press enter, you will have Forex rate exchange screen.

Rate of exchange for recipt

You can manually override this rate by typing on it.

Press enter, the final screen will look like this.

Forex receipt voucher

Press enter and accept the receipt.

Forex Gain /Loss

In the above transaction,

Exchange rate on receipt date :  INR 60  = $  10000 X 60 = 600000

Exchange rate on selling date :  INR 55  = $ 10000 X 55 = 550000

Forex Gain                                           =                INR 50000.00

View Forex Gain/Loss in Tally.ERP 9

To view Forex gain or loss you have to view balance sheet of the company.

Gateway of Tally> Balance sheet

Un-adjusted forex gain /loss

Adjusting Forex Gain/Loss

You have to adjust the Forex Gain /Loss by doing the following.

  • Create a Forex Gain Loss Ledger under Indirect Income/Indirect Expense as the case may be.

Forex Gain/Loss Ledger

Create a Voucher class Forex Gain/Loss in Journal Voucher type.

To adjust the Forex gain/loss you have to create a voucher class in journal voucher, you can either create or edit existing journal.

Gateway of Tally>Accounts Info>Voucher Type>Alter 

Choose Journal, and in the voucher type alteration screen.Under name of class field, give a new name for example : Forex Gain/Loss.

Journal voucher type alteration

Press Enter

In the class screen you will see option

  • Use class for Forex Gain/loss adjustment  : Yes
  • Ledger name : Select the ledger we have created above. ‘Forex Gain/Loss’

Voucher class

Press enter,save voucher class screen, then voucher type screen.

How to pass the Forex Gain/Loss adjustment  journal entry.

Go to

Gateway of Tally> Accounting Voucher> F7 Journal

Voucher class selection

Press enter, You need to fill the party name from which we gained /lost during transaction here XYZ Inc

Forex gain lossadjustment journal

Hope this tutorial helped. If you like our tutorial please consider subscribe our news letter, we will send you email whenever we post a new tutorials. also consider our YouTube channel and Facebook page also.

 

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