Glossary

QuickBooks Exchange Gain or Loss

Exchange Gain or Loss is the account a multicurrency QuickBooks Online file uses for the home-currency difference that appears when a foreign-currency amount is settled, or revalued, at a different exchange rate from the one it was recorded at.

Also called: Exchange Gain or Loss account, foreign exchange gain or loss QuickBooks, realized exchange gain QuickBooks Online, FX gain or loss QuickBooks

Start a free trial View Pricing

Definition

In a QuickBooks Online file with Multicurrency on, every foreign-currency transaction carries two numbers: the amount in its own currency, and its value in your home currency at the exchange rate on that transaction. Nothing goes wrong until the same foreign amount is valued twice at two different rates. A euro bill recorded at one rate and paid at another is the simplest case. The euros match exactly. The dollars do not.

That gap has to land somewhere, and Exchange Gain or Loss is where it lands. In Intuit’s own worked examples, paying a foreign bill at a new rate is saved with the note that "an exchange gain or loss will be recorded on this transaction", and depositing a foreign customer payment into a home-currency bank account produces "an entry to Exchange Gain or Loss" on the deposit’s journal entry.

The account is not a place you post to by choice. It is where QuickBooks records the result of rate movement on money you actually held or owed. Reading it well means knowing which of two routes put each amount there: a transaction that settled at a new rate, or a revaluation you ran at period end.

Key points

+It belongs to Multicurrency. Intuit offers Multicurrency on Essentials, Plus and Advanced, and states that it is not available for Simple Start users.
+Income and expense accounts always use the home currency, so the revenue and expense lines of a foreign transaction are translated once and never move. Rate differences show up here instead.
+Settling a foreign amount at a different rate from the one it was recorded at records a realized gain or loss on that transaction.
+A home currency adjustment records a realized gain or loss on bank and credit card accounts, and an unrealized one on accounts receivable and accounts payable.
+Unrealized amounts are report-level. Intuit’s own guidance describes a $0.00 placeholder journal entry for them, with the amounts shown in reports when "Show unrealized gain or loss" is checked.
+When you run a home currency adjustment, QuickBooks Online creates a journal entry.
+Intuit lists the profit and loss, balance sheet, customer balance detail, vendor balance detail, and statement of cash flows reports as the ones that show unrealized gains or losses.
+QuickBooks can only save one exchange rate per day per account.

Two routes into the account

The first route is settlement. Say a US company enters a €1,000 bill from a supplier when the euro is at 1.1000, so QuickBooks carries $1,100.00 of accounts payable. The bill is paid from a US dollar bank account when the euro is at 1.1200, so $1,120.00 leaves the bank. The euro side of the bill is paid in full. The dollar side is $20.00 short, and that $20.00 is a realized exchange loss, recorded on the payment. Intuit’s worked example for paying bills in another currency ends on exactly this: "an exchange gain or loss will be recorded on this transaction."

The second route is revaluation. A foreign balance that has not been settled yet, such as a euro bank account or an open euro invoice, keeps the home-currency value from the rates it was recorded at until you run a home currency adjustment. Intuit describes that tool as recalculating the home currency value of your foreign balances based on a new rate, and says it shows up in bank accounts as a realized gain or loss and in accounts receivable or payable as an unrealized one. Only the realized part lands in Exchange Gain or Loss as a posted amount. An Intuit walkthrough of the Revalue Currency transaction describes the unrealized part as a $0.00 placeholder journal entry, with the revaluation itself appearing only in reports when their "Show unrealized gain or loss" option is checked. Leave that placeholder entry alone: Intuit says it should never be deleted.

Knowing the route tells you what a balance in the account means. Settlement amounts are finished: the money moved. Revaluation amounts on receivables and payables are on paper until the invoice or bill is actually paid.

Realized versus unrealized, in Intuit’s words

Intuit defines unrealized foreign exchange gains or losses as profits or losses on paper, due to changes in exchange rates. Realized ones happen after the transactions have been completed, when money has actually been collected or paid.

The distinction follows the account type, not your intent. Intuit states that home currency adjustments affect accounts payable or accounts receivable as unrealized gains or losses, and bank accounts as realized foreign exchange gains or losses. A euro bank account holding euros you already own is treated as realized when revalued. A euro invoice a customer has not paid yet is not.

That is why an Exchange Gain or Loss figure on a profit and loss report is not one number with one meaning. Before you explain it to anyone, split it into what settled, what was revalued on bank and card accounts, and what was revalued on open receivables and payables.

Where Stripe activity meets it, and where it does not

Most Stripe businesses never touch this account through Stripe at all. By default, Stripe "automatically converts all incoming funds into your default currency." If that default currency is your QuickBooks home currency, the Stripe clearing account is a home-currency account, and the currency difference on every foreign charge was settled inside Stripe before the money reached your books. There is nothing for QuickBooks to revalue.

It starts to matter when Stripe holds money in another currency through multi-currency settlement, and your QuickBooks file mirrors that with a clearing account and a bank account in the same foreign currency. Those are bank-type accounts, so any movement in their home-currency value reaches Exchange Gain or Loss as a realized amount when you revalue them. The two events to watch are the period-end revaluation of those accounts and any conversion between two Stripe balances, both covered in the related reading below.

One boundary worth keeping: Stripe’s fees are not exchange differences. A fee is an expense in its own right, even when Stripe charges it in another currency, and it belongs with your other processing costs rather than in this account.

Reading the account at month end

Run the profit and loss report twice. With "Show unrealized gain or loss" unchecked, the Exchange Gain or Loss line is the realized amount only, which is what the Intuit walkthrough uses to isolate it. With the option checked, the unrealized revaluation of open receivables and payables is added. The difference between the two runs is the part that is still on paper.

Then open the journal entries QuickBooks created for each home currency adjustment. Intuit notes that entries with non-zero amounts mean you revalued bank or credit card accounts and have realized gains or losses, which separates revaluation from the settlement differences recorded on individual payments.

Finally, run the adjustment only after every foreign transaction for the period is in, so the revaluation starts from complete balances. If the account is empty while your foreign bank and clearing balances have obviously drifted against the home currency, that is not good news. It usually means nobody has revalued them.

How Acodei works with exchange rates in QuickBooks

Acodei has two levels of multicurrency support, Multicurrency Support and Invoice Multicurrency, and both are turned on by the Acodei team on request rather than being self-serve toggles. QuickBooks Online’s own Multicurrency setting has to be on too: if Multicurrency Support is on in Acodei and the QuickBooks setting is not, syncs will error.

With Invoice Multicurrency on, a Stripe invoice in a currency other than your home currency is created in QuickBooks in the Stripe currency, and the payment is recorded later with its own exchange rate, using Stripe’s rate where it is available and QuickBooks’ rate otherwise. Refunds, credit notes and payouts in a currency other than home currency carry an exchange rate as well, and a payout in another currency is recorded as a Transfer. The invoice and the payment are separate QuickBooks records with their own rates, so QuickBooks accounts for any difference between them the way it does for any foreign invoice settled at a new rate.

For a Stripe account with more than one balance, Acodei recommends a separate holding account and deposit account for each balance, using regular clearing accounts rather than Undeposited Funds, and Invoice Multicurrency is not permitted when the holding account is Undeposited Funds. Zero-decimal currencies such as JPY are not supported today.

Want to see this on your own Stripe data?

Start a free trial

Frequently asked questions

What is the Exchange Gain or Loss account in QuickBooks Online?

It is the account a multicurrency QuickBooks Online file uses for the home-currency difference when a foreign amount is settled or revalued at a different exchange rate from the one it was recorded at. Paying a foreign bill at a new rate, or depositing a foreign payment into a home-currency account, records an entry to it. So does the realized part of a home currency adjustment on bank and credit card accounts.

Is an exchange gain in QuickBooks realized or unrealized?

It depends on how it got there. A difference from settling a transaction at a new rate is realized, because the money moved. A home currency adjustment is realized on bank and credit card accounts, and unrealized on accounts receivable and accounts payable, according to Intuit.

Why is my Exchange Gain or Loss account empty when I have foreign balances?

Usually because nobody has run a home currency adjustment. QuickBooks keeps each foreign transaction at the home-currency value from its own exchange rate, and only restates foreign balances when you revalue them. Until then, any drift sits unrecognized in the foreign accounts themselves.

Do I need Exchange Gain or Loss if Stripe converts everything to US dollars?

Not for your Stripe activity. By default Stripe converts all incoming funds into your default currency, so a US business whose Stripe balance is in dollars has a dollar clearing account with nothing to revalue. The account matters when Stripe holds a balance in another currency, or when you invoice or pay bills in other currencies in QuickBooks.

Can I use Exchange Gain or Loss on QuickBooks Simple Start?

No. The account belongs to Multicurrency, and Intuit states that Multicurrency is not available for Simple Start users. A Simple Start file has no foreign-currency accounts to settle or revalue, so a business in that position has to track exchange differences with its own account and manual entries, or upgrade.

What customers say about running Stripe through Acodei

★★★★★

“If you're testing out all the different Stripe/QuickBooks integration apps right now, let me save you some time. This one is the best one by far.”

RyanOwner at Indie Music Academy

★★★★★

“Works well and is really helpful for massive transactions. The support is really fast and helpful. 100% recommended.”

AndresCo-founder and CEO at Kanguro Collections and Reinsurance

More glossary terms

See the full glossary

Ready to try Acodei?

Connect Stripe to QuickBooks Online in minutes and let the fees, refunds, and payouts land where your accountant expects them.

Start a free trial See how it works