This is probably more of a general accounting question but I'll ask it anywayz.
If you are dealing in USD and on your balance sheet you have an Accounts Receivable account for USD transactions (but it has already been converted to AUD - Say $1,000AUD).
If you don't receive payment on that sale for say six months (being in $USD) and there is a big change in exchange rates from when the purchase took place to when the transaction was paid, then the figure on the balance sheet at the moment won't entirely be accurate because it is a false representation of the value of the asset as as of the current day, (ie: it is no longer worth $1,000AUD if payment was to be received today, it may be worth $500AUD).
In terms of proper Accounting theory, what is the correct way to account for this? As if you were preparing a balance sheet as of today, my understanding of the balance sheet is that it was supposed to show an accurate overview of assets and liabilities as of the current day.
If you are dealing in USD and on your balance sheet you have an Accounts Receivable account for USD transactions (but it has already been converted to AUD - Say $1,000AUD).
If you don't receive payment on that sale for say six months (being in $USD) and there is a big change in exchange rates from when the purchase took place to when the transaction was paid, then the figure on the balance sheet at the moment won't entirely be accurate because it is a false representation of the value of the asset as as of the current day, (ie: it is no longer worth $1,000AUD if payment was to be received today, it may be worth $500AUD).
In terms of proper Accounting theory, what is the correct way to account for this? As if you were preparing a balance sheet as of today, my understanding of the balance sheet is that it was supposed to show an accurate overview of assets and liabilities as of the current day.