Why this is mistaken
Closing, transaction-date, average, settlement, and historical rates serve different amounts. Match the rate to the balance or flow, date or period, and accounting model. State the quotation and source. The correction translates ending assets and liabilities with current rates, uses supported rates for income-statement flows, and preserves historical rates for applicable equity. A balancing result does not validate a wrong rate choice.
Where to watch
When this mistake may appear
- The year-end rate works for the whole translated trial balance.
Check your work
Your work may contain this mistake if:
- Uses a closing rate for flows or historical equity without documenting why an approximation is appropriate.