I am keeping track of my personal finances in a physical accounting journal. At a currency exchange desk, I converted 100 CAD into 75 USD. How should I record this transaction in my journal? In double-entry accounting, the debits and credits must balance, but my journal entry below does not balance.

Account Debit Credit
Cash — USD 75
Cash — CAD 100

How should I journalize the currency conversion so that the debits and credits will balance?

  • 1
    You should identify what currency is your ledger in (USD or CAD). May be duplicate of How to record currency exchange in double entry Aug 21, 2022 at 6:13
  • @MorrisonChang Most of my transactions are in CAD. No, this question is not a duplicate of that question because that question is specific to GnuCash, which has built-in currency conversion features.
    – Flux
    Aug 21, 2022 at 8:32
  • 2
    Arguably if Gnucash could have done it differently the software would have. As @base64's answer states Foreign currency should be treated as if they are quantifiable investments. How are you handling stock/bond/asset purchases in your journal? The Cash-USD is just an Asset with variable CAD valuation. Aug 21, 2022 at 13:17
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2 Answers 2


It balances in terms of CAD.

The asset "USD 75" could be treated like a marketable security.

If desired, you could treat the the exchange fees as an expense rather than a decrease in the USD purchased.


I converted 100 CAD into 75 USD. How should I record this transaction in my journal?

The exchange rate was 0.75 USD = 1 CAD. And your primary currency is CAD so all accounting is done using CAD currency only. The journal entry is:

Account Dr./Cr.
Cash in USD 100 Dr.
Cash in CAD 100 Cr.
(75 USD bought for 100 CAD)

The utilisation of USD currency or its closing balance will be reported using the exchange rate on the transaction date or balance sheet date, as the case is. The exchange loss/gain, if any, will be transferred to the forex translation expense or gain account.


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