Foreign Currency Accounting in Tally

Foreign Currency

Normally organizations maintain accounts in currencies of that country (called Base Currency). However,  Importers, Exporters, Money Exchangers, etc, who buy / sell or pay/ receive in foreign currency are required to enter transactions in Foreign currency also.  

Base Currency

For  every Company, you must define a Base Currency at Company creation screen. This is normally the Native Currency (the Currency of the Country where the Accounts are maintained), for example, Rupees in India.

Company Base Currency Symbol set up in Tally

At Company creation screen, at Currency symbol field, enter Symbol for the Base Currency in which Books of Accounts for the company is to be maintained (Tally proposes ‘ ₹’, do not change it for Indian Companies maintaining Accounts in Indian Currency).

Base Currency Symbol set up in Tally

Base Currency Particulars

The particulars of Base Currency are shown at the bottom part of the Company creation screen .  

Tally proposes the standard values for Indian Rupee as Base Currency. So, you do not need to change default values for Base Currency ‘`₹’ as shown. However, organisations maintaining accounts in other Base Currency may change as follows:

Base Currency Information in Tally

Foreign Currency Activation in Tally

All currencies created in Tally, other than the Base Currency, are considered as Foreign Currency for the Company.

To activate foreign currency (to maintain amount in currencies other than base currency also), click F11:Features>Accounting Features  to get Accounting Features screen. At Accounting Features screen, under section General, set Yes at Allow Multi Currency .

To activate Foreign currency, set Yes at Allow Multi currency.

Foreign Currency Activation in Tally

Consequently, at Accounts Info menu  (GoT>Accounts Info), Currencies option gets activated .

Accounts Info Menu in Tally

Do not use a symbol for Foreign Currency for which there is no key in Key Board. For example, you may use  Y (or Yen), or E for Euro) (instead of ¥ or €, if a key is not available for ¥ or €), for quick entry.

Foreign Currency Master Entry

At Accounts Info menu, select Currencies to get Currencies Menu, for creation of Foreign Currency master.

Currencies Menu in Tally

At Currency Menu, select Create to get Currency Creation screen. Now enter as follows :

Foreign Currency creation in Tally

  • Currency Symbol: At Symbol , enter the Foreign Currency Symbol of the Currency.
  • Currency Name: At Formal Name, enter the Complete Name of the Foreign Currency (it must be different from Foreign Currency Symbol), as commonly used by International Trading Community & Bankers.
  • Currency Decimal Places: At Number of Decimal Places, enter the number of decimal places required to express the amount in Foreign Currency (e.g 2 for Dollars, Pounds etc, 3 for Dinars etc).
  • Currency Amount Format: At Show Amount in Millions, set :
    • Yesto show the Foreign Currency Amount formatted in Million Figures
    • No to show the amount in Lacs format . 
  • Currency Symbol position: At Is Symbol Suffixed to Amounts, set :
    • Yes to show the Foreign Currency Symbol after the Amount figure,
    • No to show the Foreign Currency Symbol prefixed to Amount .
  • Currency Symbol Spacing: At Put a Space between Amount & Symbol, set :
    • Yes to insert one letter space between the Foreign Currency Symbol and the Amount
    • No to concatenate the Foreign Currency Symbol and the Amount .
  • Amount Delimiter: At Symbol for Decimal Portion of Amount enter the delimiter for the decimal portion. Normally dot (.) is used. However, you may use any other symbol like (,).

Currency Exchange Rate Entry in Tally

Having created the new currency Master, enter  the Daily Exchange Rate of the currency with Base Currency. At Currencies Menu, select Rate of Exchange, to get Exchange Rate Entry screen.

Foreign Currency Exchange Rate set up in Tally

At Exchange Rate Entry screen , enter the Exchange Rate (with Base Currency) on the specified date, for the respective Currencies :

Date of Exchange Rate: At Date of Exchange Rate, enter the Date for which you enter the Exchange Rate.

Exchange Rate Details : Now enter the Exchange Rate details with base currency, in respect of each foreign currency, for the specified date, as follows :

  • Foreign Currency Name: At Currency column, select the Foreign currency from the list of Currencies
  • Standard Exchange Rate: At Std Rate column, enter the Exchange Rate (normally published by RBI), which is used to compute the Foreign Exchange Gain / Loss.
  • Currency Selling Rate: At Last Voucher Rate column, the Rate is carried from the last Receipt Voucher, if entered. At Specified Rate column, enter your Selling Rate, i.e, Rate in Base currency at which the Bank pays you in conversion of the Foreign Currency received by you.
  • Currency Buying Rate: At Last Voucher Rate column, the Rate is carried from the last Payment Voucher, if entered. At Specified Rate column, enter your Buying Rate, i.e, Rate in Base currency at which you pay to Bank for remitting in Foreign Currency.

Enter the Exchange Rate for each Date whenever there is any change in any of the element of Rate entered. The Rate for the Date entered or immediately prior Date (if no Rate is entered for that Date) is applied to the voucher as default. For example for Date 5 Jun 2013, the Rate entered for 5 Jun 13 or immediately prior to that (e.g 1June 13) would be applied.

Currency Buying & Selling Rates are also used for calculating foreign exchange variances where there is no Standard Rate.

Tally automatically calculates Forex Gain or Loss for foreign exchange transactions using the Standard Rates (or Specified Rates) and Actual transaction Rates as applicable,  

Currency Master Display in Tally

At Currency Menu, select Display and then select the Currency to be displayed from the list of Currencies (showing all currencies including Base Currency) :

Foreign Currency Masters Details in Tally

On selection of Foreign Currency, you get the details of Currency & Exchange Rates as entered.

Foreign Currency Display in Tally

Base Currency Details in Tally

On selection of Base Currency, you get the details of Base Currency as entered at Base Currency, at Company creation / Alteration screen.

However, in Display screen, you just view the details, but you cannot make any alteration in the screen.

Base Currency Display in Tally

Currency Master Alteration in Tally

At Currency Menu, select Alter and then select the Currency to be Altered. You get similar screen as Display. Now, you can make any alteration in any field in the screen (take the cursor on the field by keyboard or click on the field by Mouse) and make alteration in the data as desired. After changing, Type Yes (at Yes No) or press Alt+A to save the changes made.

Ledger Accounts Currency set up in Tally

Accounts Ledger Creation has been explained earlier . Having activated Foreign Currency, at Ledger Creation screen, you get an additional Field Currency of Ledger .  At Currency of Ledger , select the Currency in which you like to maintain for the ledger account, from the list of Currencies.Normally, you should specify the respective foreign Currency for Parties with whom you deal in Foreign Currencies. In all other ledgers, you should specify Base Currency. Similarly, for Bank Accounts, you should select the respective Currency in which the account is maintained.

Ledger Account Master  Currency set up

Accounts Voucher entry in Foreign Currency in Tally

Accounts Voucher Entry has been explained earlier. Here we discuss about the entry of Amount in Foreign Currency.

Having selected the Ledger Account in Voucher entry , enter the Ledger  Amount details as follows:

  • Amount in Foreign Currency : To enter an amount in any Foreign Currency, at amount field enter currency symbol as specified in the respective currency master before the amount .
  • Amount in Base Currency : To enter amount in Base Currency, just enter the Amount as usual without any Currency prefix

Foreign Currency Symbol in Accounts Voucher

Foreign Currency Details Entry in Accounts Voucher in Tally

On entering Ledger Amount in Foreign currency, you will get Forex Rate of Exchange subscreen,to enter the following details.

Foreign Currency details entry in Accounts Voucher in Tally

  • Forex Amount: The Amount entered in Foreign currency is carried (you may change it in the window).
  • Rate of Exchange: Tally proposes the Currency  Rate (Selling Rate in Receipt Voucher, Buying Rate in Payment voucher or the Standard Rate), as the case may be, which you may change.
  • Value: The computed value in Base Currency as per Exchange Rate entered is displayed, which you may change.

Accounts Voucher entry in Foreign Currency in Tally

The Amount as entered in Value field in Base Currency is carried to the Amount column in Voucher Main screen

If you change the Amount in the window, the Exchange Rate is back calculated as per the foreign currency and the Amount.

If the symbol does not match with existing Currency Master, cursor would not move to next field. If the currency symbol is not available at your keyboard, you may be able to enter it in conjunction with Alt key. For example, to enter £, hold down Alt key and type 156 at numeric keypad. You may be able to enter ¥ by holding down Alt and pressing 157 from numeric keypad (you may try if it works). So, avoid such currency symbols (you may use normal keyboard characters for initials for Symbol (e.g Y instead of ¥ as currency symbol), otherwise data entry will be painful.

As you do not have to enter symbol for Base Currency (which is default), you may specify ₹ as Base Currency Symbol even though the symbol is not available in keyboard.

Accounts Voucher  Foreign Currency Entry Configuration in Tally

When Foreign Currency is activated,  at Voucher Entry Configuration (click F12:Configure at Voucher Entry screen), you get an additional option Show Forex Gain Loss as on Voucher Date., showing Forex Gain Loss.

Voucher Configuration showing Foreign Currency option

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