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Multiple Currency Tracking – GnuCash Free Accounting Software

GnuCash Free Accounting Software

Looking for a free, double-entry accounting software package that easily handles multiple currencies? GnuCash fits the bill! Designed for individuals and small businesses, GnuCash is open-source software designed as a free alternative to programs such as Quickbooks, Peachtree, and Quicken.

Powerful and adaptive enough to run your small business and personal finances, GnuCash is also perfect to use for trip planning and tracking your expenses as you travel. Its ability to handle multiple currencies simplifies the process of analyzing your expenses and staying within your budget as you travel.

GnuCash uses a simple checkbook-style register to record debits and credits. From these entries you are able to generate reports, including the three most important: the balance sheet, the profit and loss, and the cash flow statement. Best of all, these reports will be in your home currency – GnuCash converts cross-currency transactions automatically! In addition, you are also able to setup budgets in the program that you can use to monitor your trip.

The initial learning curve is moderate. Once you are familiar with the program, setting up accounts and entering data becomes simple and easy.

Part 1: Download and Install GnuCash

Click to read Part 1

The first step is to download and install the program – Download GnuCash.

After the installation, you will create a new file for your trip. We recently traveled to Hong Kong, so I will setup a simple account for that trip.

Under File, choose New File and follow these 4 steps:

1. Forward to Choose Currency – We track our travel budgets in USD.

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2. Forward to Choose Accounts to Create – Since this is a budget using minimal accounts, we choose A Simple Checkbook. Keep it simple!

Note: Make sure that you un-check all other Account Types or it will add those accounts to your file.

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3. Forward to Finish Account Setup and click Apply.

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4. Name your file and save – you are now ready to start your account setup!

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I like to start by expanding the accounts by clicking the arrow on the left and deleting the accounts that I do not need for this very simple budget. In Assets, I delete the Current Assets account. Click on Current Assets, right-click, choose Delete all sub-accounts, click delete.

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I am now ready to add the accounts that I need for the trip. I will need to add accounts to Assets, Expenses, Liabilities, and Opening Balances. I first determine what accounts I want to create:

Assets – I will create two sub-accounts:

  • USD Cash
  • HKD Cash – Important: select Hong Kong Dollar as security/currency when setting up the account.

Expenses – I will create five sub-accounts:

  • Flight
  • Hotel
  • Food
  • Entertainment
  • Transportation

Liabilities – You will notice that The Simple Checkbook does not include a Liability Account. I will add the parent account Liabilities and create Credit Card sub-accounts as needed for each credit card that I plan to use. On this trip, I only plan on using one card.

Opening Balances – I will create two sub-accounts so that we can add foreign currency to the equation:

  • USD Opening Balance
  • HKD Opening Balance – I need to create this because I have 8.8 HKD from a previous trip.

The easiest way to add sub-accounts is to right-click on the home screen and choose New Account. If you right-click on the actual Account Name line that you want to be the parent, it will default to the correct Account Type and Parent Account. Add the name, description, and security/currency (if it is a foreign currency).

In this example, I am creating the parent account Liabilities so that I can add a credit card. I choose Liability as the Account Type and New Top Level Account as Parent Account. Note that it defaults to USD for the Security/currency.

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In the following example, I am ready to add an expense sub-account. I right-clicked on the Expenses line and it defaulted to the correct Account Type and Parent Account.

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Once I have added all of my accounts, they are ready to use! Note that the HKD is showing the correct currency symbol.

GnuCash Free Accounting Software

In Part 2, we will populate the Assets using opening balances, set conversion rates for the foreign currency, and record transactions.

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Part 2: Input Data

Click to read Part 2

After completing the steps in Part 1, we are ready to start inputting data so that we can record our expenses. To properly translate the transactions into USD for reporting and analyzing, we will begin by determining which rates are necessary and manually updating the currency exchange rates. This is the most difficult step; currency conversion is complex! Once you get the hang of it, and are familiar with the GnuCash program, it gets much easier.

We start the trip with 900 USD and 8.8 HKD. We use 600 of the USD trip money to purchase 4662 HKD at the rate of 1 USD = 7.77 HKD. Use the actual rate that you pay when you purchase your currency.

Since we have our rate for the USD/HKD purchase, we begin by opening the Price Editor. Click Tools, click Price Editor.

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In the Price Editor, click Add.

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Choose USD (US Dollar) for the Security, HKD (Hong Kong Dollar) for the Currency, enter 7.77 as the Price, click OK.

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The next step is to add currency to the cash assets. We create an opening balance transaction for each of the asset cash accounts where we have existing cash. Once the money is added into each account, we can start spending it!

The opening balance transactions will be:

  • USD Opening Balance to USD Cash
  • HKD Opening Balance to HKD Cash

We start by clicking the USD Opening Balance account and then pressing Ctrl T to open Transfer Funds.

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Enter 900 in the Amount, add the description that you want to use, scroll up in the Transfer To box and select USD Cash under Assets, click OK.

GnuCash Free Accounting Software

When you look at your Accounts screen, you will see that you now have 900 USD Cash to spend and an equal 900 USD Opening Balance.

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Next, we add the leftover 8.8 HKD from our previous trip. We use HKD Opening Balance to transfer it to HKD Cash.

Our opening balances are complete, and we are ready to start spending some money! Notice that the Assets and Equity Parents calculate the HKD as USD automatically.

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To make the reporting easier to analyze on the Accounts screen, click the arrow in the top right-hand corner of the screen and select the Total (USD) option. This will add a column that shows the foreign currency transactions for each sub-account in USD.

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Our Accounts screen now reflects the actual currencies and their conversion to USD.

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We are now ready to enter our HKD purchase with the 600 USD. Notice at the bottom of the Transfer Funds screen the conversion rates are activated. Important: We are using USD that has already been entered from Opening Balances. This is an Asset used to purchase another Asset; don’t mistakenly use the Equity Opening Balances.

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We purchased our hotel stay for 700 USD using our credit card. To enter the transaction, we can click either of the two accounts involved (Credit Card and Hotel) and then press Ctrl T to open Transfer Funds (this should seem familiar by now!).

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We are transferring from Credit Card to Hotel. Notice that since we clicked the Liability (Credit Card), the Expense category is not available. Check the box next to Show Income/Expense to access these accounts for the transfer. Enter the Amount, Description, choose the accounts, click OK.

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We purchased our flight for 800 USD using our credit card. To enter the transaction, we can click either of the two accounts involved (Credit Card and Flight) and then press Ctrl T to open Transfer Funds. If necessary, check the box next to Show Income/Expense to access these accounts for the transfer. Enter the Amount, Description, choose the accounts, click OK.

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We cannot even get out of the airport before we spot a dim sum restaurant. Let’s spend some HKD! We stuff ourselves, and the bill is a whopping 157 HKD. To enter the transaction, we click either of the two accounts involved (HKD Cash and Food) and then click Ctrl T to open Transfer Funds. Important – make sure you choose the asset HKD, not the equity opening balance HKD. Enter the Amount, Description, choose the accounts, click OK. The Currency Transfer automatically changes the HKD to USD for the expense!

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After entering our expenses, our Accounts screen shows us how much of each currency we have remaining and our expenses – all in USD. Before we have even stepped out of the airport we have spent 1520.21 USD!

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In Part 3, we will explore the reports available and how to set up a budget for your trip.

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Part 3: Reporting and Analysis

Click to read Part 3

After completing Part 1 and Part 2, we now have data in GnuCash and can start to use it for reporting and analysis. To look at all of the transaction that we have made, we will open the General Ledger. To open the General Ledger, click Tools, click General Ledger.

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Once you open the General Ledger, notice that for every credit amount, there is a debit amount that equals. It has to, this is the beauty of double entry accounting! In double entry accounting, every transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the accounting equation Assets = Liabilities + Equity.

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If you notice that you have made an entry error, you can make changes in the General Ledger, but it is easier if you identify the account, and, on the Accounts screen, simply double-click the account to open. To change the Food entry, double-click on Food. Locate the specific transaction and change the Date, Description, or Expense. By making the correction in this screen, it automatically adjusts the corresponding account (Assets:HDK), keeping everything in balance.

To access the Balance Sheet, click Reports, click Assets & Liabilities, click Balance Sheet.

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The reports open to a default view that you are able to customize. To customize the report, click Options to explore the programs capabilities. On my Balance Sheet report, I want to remove the zero balance figures, so I go to the Display tab, click Omit zero balance figures, click OK.

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Now the report is more manageable and easier to analyze. Notice that it converts the HKD to USD.

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To save the report configuration, simply click Save Report Configuration. I recommend doing this for all of the reports that you regularly access.

To view the balance sheet with the new configuration later, click Reports, click Saved Report Configurations, click Balance Sheet in the Saved Report Configurations pop-up window.

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To access the Income Statement, click Reports, click Income & Expense, click Income Statement.

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To access the Cash Flow Statement, click Reports, click Income & Expense, click Cash Flow.

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To create a budget for the trip, click Actions, click Budget, click New Budget.

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This is a short trip and I want to create a daily budget. Click Options. In the pop-up screen, enter Name, enter 1 for Every, select day(s), select start date, enter the Number of Periods (7 days in this example), click OK.

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Populate the budget by simply clicking in the appropriate field and entering the budget target amounts.

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Once the budget is completed, simply click Close. To view the Budget Report, click Reports, click Budget Report.

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I like to customize the budget report to display only the expenses and to calculate the difference between the budgeted amount and the actual amount. This makes it much easier to analyze. To customize, click Options. To remove everything except Expenses from the report, click the Accounts tab, click Always show sub-accounts, click Clear All, click expenses. Don’t click OK yet; we will now click on the Display tab.

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To add the calculation of the difference between the budgeted amount and the actual amount to the report, click Show Difference, click Show Column with Total, click OK.

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Now I have a very neat and useful budget that I will save by clicking Save Report Configuration. To access it, click Reports, click Saved Report Configurations, click Budget Report. It looks like we’ll be eating at 7/11! We only have 9.79 USD remaining to spend on food on the first day.

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That’s it! There are many more features, shortcuts, hacks, and reports that are available, but you will discover these as you become more familiar with GnuCash. The program has a searchable tutorial that answers most questions and serves as a great reference. To access it click Help, click Tutorial and Concepts Guide.

GnuCash Free Accounting Software

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GnuCash is a fantastic tool to help you plan and stay on budget on your next travel adventure. Once you are familiar with the program, the entire sample file that I demonstrated takes about 10 minutes to setup and configure. When I started using GnuCash, I was used to AccountEdge Pro software, and the very simplicity of GnuCash made it seem much more difficult to use. After several years of using it, I now love the simplicity. Best of all, it is free! I highly recommend it for personal finances and for small businesses that do not need a payroll feature.