Accounting Currency

DEFINITION of 'Accounting Currency'

The monetary unit used when recording transactions in a company's book. The accounting currency is not necessarily the same as the selling currency, which is what customers see when conducting a transaction, such as a sale. Companies are likely to use their home country's currency when recording transactions, even if the sale was denominated in a foreign currency. For example, a Chinese firm conducting business in Japan will likely use the yuan as the accounting currency, even if sales transactions are conducted using the yen.

BREAKING DOWN 'Accounting Currency'

For companies or investors managing multiple currencies, the interplay of foreign exchange rates and conversions can make the maintenance of the books a complicated task. For companies operating in countries with a major currency, such as the U.S. dollar, euro or pound, the accounting currency may be the same as the selling currency. Companies operating in smaller markets with "minor" currencies are more likely to have a domestic accounting currency and a foreign selling currency.

RELATED TERMS
  1. Base Currency

    The first currency quoted in a currency pair on forex. It is ...
  2. Currency Pair

    The quotation and pricing structure of the currencies traded ...
  3. Dollarization

    A situation where the citizens of a country officially or unofficially ...
  4. Dollar Rate

    The exchange rate of a currency against the U.S. dollar (USD). ...
  5. Quote Currency

    The second currency quoted in a currency pair in forex. In a ...
  6. Reciprocal Currency

    In the foreign exchange market, a currency pair that involves ...
Related Articles
  1. Markets

    What Happens in a Currency Crisis?

    A currency crisis comes from a decline in the value of a country’s currency.
  2. Forex Fundamentals

    The Effects Of Currency Fluctuations On The Economy

    Currency fluctuations are a natural outcome of the floating exchange rate system that is the norm for most major economies. The exchange rate of one currency versus the other is influenced by ...
  3. Forex Education

    Forex Currencies: Conclusion

    By Brian Perry Conclusion The currency markets are the largest and most actively traded financial markets in the world with daily trading volume of more than $3 trillion (Triennial Central ...
  4. Forex Education

    Forex Tutorial: Reading a Forex Quote and Understanding the Jargon

    One of the biggest sources of confusion for those new to the currency market is the standard for quoting currencies. In this section, we'll go over currency quotations and how they work in ...
  5. Mutual Funds & ETFs

    Protect Your Foreign Investments From Currency Risk

    Hedging against currency risk can add a level of safety to your offshore investments.
  6. Forex Education

    The Forex Market: Who Trades Currency And Why

    The forex market has a lot of unique attributes that may come as a surprise for new traders.
  7. Forex Fundamentals

    How Foreign Exchange Affects Mergers and Acquisitions Deals

    Learn how foreign exchange rates can impact the flows of international merger and acquisition (M&A) transactions, and understand how deals can impact exchange rates.
  8. Mutual Funds & ETFs

    Profit From Forex With Currency ETFs

    There's always a bull market somewhere - and now you can find it with currency ETFs.
  9. Stock Analysis

    The Ultimate Guide To Currency ETF Trading

    Want a simpler way to invest in the forex market? Currency ETFs give you just that!
  10. Forex

    The 6 Most-Traded Currencies And Why They're So Popular

    Regardless of the reason, forex is an integral part of 21st century finance. And the more widely used and reliable the currency, the greater the likelihood of people buying and selling it every ...
RELATED FAQS
  1. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
  2. How do I find out my bank's bid-ask spread for currency conversions?

    Learn how to find your bank's bid-ask spreads for currency conversions, and understand why you should consider alternative ... Read Answer >>
  3. Is there a world currency? If so, what is it?

    There is no such thing as a world currency. However, since World War II, the dominant or reserve currency of the world has ... Read Answer >>
  4. How do you make money trading money?

    Investors can trade almost any currency in the world. Investors, as individuals, countries, and corporations, may trade in ... Read Answer >>
  5. Why is currency always quoted in pairs?

    When reading currency quotes, you have probably noticed that there is only a single quote for a pair of currencies. Currency ... Read Answer >>
  6. How can I trade in cross currency pairs if my forex account is denominated in U.S. ...

    The forex market allows individuals to trade on nearly all of the currencies in the world. However, most of the trading is ... Read Answer >>
Hot Definitions
  1. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  2. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  3. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  4. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  5. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center