Describe reporting currency and accounting currency
You may need to use multi-currency functionality in your organization for several reasons; for example:
- Your organization is engaged in business with other countries/regions in other currencies.
- Your organization has branches in multiple places that use different currencies.
- Your branches are engaged in business in their respective currencies, but they report to headquarters in one reporting currency.
Dynamics 365 Finance has a currency page that isn't bound to a legal entity.
Finance is shipped with 177 standard global currencies. In some rare cases, customers may need to add currencies that aren't listed in the standard shipped application. Finance uses a reserved ISO code 999 in scenarios such as adding a new currency.
Each legal entity must have a primary currency, which is the accounting currency for that legal entity. The primary currency is the default currency for any transaction in the legal entity. If you want to do a transaction in another currency, you must define the exchange rate with the default currency. The system doesn't allow you to process the transaction if the exchange rate is undefined.
In Finance, you can define multiple exchange rate types. You can define different exchange rates for the same currencies and apply them for different processes. You can set a Default exchange rate type for regular transactions, with daily updates of the exchange rates. You can have an exchange rate type for budget to use for the creation of an annual budget. A tentative exchange rate is maintained in the budget exchange rate, which is applicable throughout the year.
When you select the Exchange rates buttons in the action pane, you can navigate to the Currency exchange rate page, where you can define the exchange rates between the currencies. In the Add or remove exchange rate FastTab, you can define the exchange rate based on dates. Multi-currency transactions pick up the correct exchange rate based on the transaction date and update the transactions accordingly.
The default currency and default exchange rate types of a legal entity can be defined in the Accounting currency and Accounting currency exchange rate type fields respectively in the General ledger module > Setup > Ledger page. You can also define the budget exchange rate type on the Ledger page. You can define the sales tax exchange rate type on the General ledger parameters page.
You can define the reporting currency on the Ledger page and use it as a second accounting currency. This functionality is referred to as dual currency.
The General ledger module includes two page links on the Currency menu: Configure exchange rate providers and Import currency exchange rates. These two menus help to configure the exchange rate provider and import the latest exchange rate in the specified exchange rate type.
You can also define the Maximum penny difference and Maximum penny-rounding in the reporting currency under the General ledger parameters page. For multi-currency journal posting, these two fields configure the penny difference threshold between the accounting currency and transaction currency.
The difference amount is posted in the main account defined against the posting type Penny difference in account currency in the Accounts for automatic transaction page. This page is available on the Posting setup menu in the General ledger module.
