We have a USD account for Paypal. We enter the relevant date and exchange rate in the list used for that purpose (under Settings / Company / Currency). For example, at 30 Dec 2016, the Bank of Canada rate is C$1.3427 = USD$1.00, and in the FX list, we enter "1.3427" with the appropriate date.
In the general ledger display for the account, when the display is set to "Balances in the currency of each account", the DR and CR transaction entries, and the running account balance shows correctly (ie, in the USD actual amounts).
But when the GL display is set to show "Balances in Home and Foreign Currencies" [or in just the home currencies], then:
(a) although the DR and CR amounts are shown (in CDN) correctly -- that is, a 30 Dec 2016 transaction for USD$20 would show in the appropriate DR/CR column as 20 x 1.3427 = CDN$26.85 --,
(b) the running balance (which in that setting is shown in the home currency of CDN) reflects calculations being done with completely different (and reversed!) FX rate. And the balance sheet displays the same error. That is, the math of the DR/CR is being done correctly, but the beginning and end balances in allegedly the home currency
For example, when the GL is set to "Balances in currency of each account", the correct USD end balance is shown (say, USD$500). But in the home currency, the balance is shown as CDN $266.54! Which reflects an exchange rate of USD1.8759 = CDN1.00. [ie, the USD is worth less than the CDN]
And if we adjust things so that the home currency balance [when adjusted for the FX rate] works correctly, then the USD balance shown [when that display option is selected, whether the GL display, the balance sheet, or the trial balance], is wrong -- again, by some weird adjustment factor that bears no relation to the data in the FX list.
I suppose the work-around is to adjust towards the correct home currency balance sheet amount [using manual verification], even though it means the USD amount displayed on the balance sheet / trial balance [when that display is selected] will be wildly wrong.
