My business invoices and pays in several currencies — how do I keep the books straight without distorting profit?

The first step for any business dealing in more than one currency is clearly identifying its functional currency — the currency that reflects the primary economic environment the business operates in, not just whatever currency an occasional invoice happens to be in. Transactions in a currency other than the functional currency should be recorded at the exchange rate on the date the transaction actually occurs.

At each month-end, monetary items — bank balances, foreign-currency receivables and payables — need to be revalued at the exchange rate on the reporting date, and the resulting gain or loss recognized in the income statement immediately, not deferred until the cash is actually collected or paid. Skipping that monthly revaluation makes reported profit unreliable, especially when the currency has moved significantly during the period. RASEEKH applies a consistent monthly revaluation policy for foreign-currency balances, rather than a single adjustment tacked on at year-end.