【正文】 na branch kept the accounts with the foreign correspondents, the Nostro accounts, in terms of both the foreign currencies and the local currency. At a point in time, the exchange profit or loss was calculated by taking the difference between the balances stated in the foreign currencies and the balances stated in the local currency (Littleton and Yamey, 1956, p. 145). 3 A similar accounting technique was used by colonial American merchants during the 15 years between 1795 and 1810 when businesses were making the transition from English pounds to US dollars. The accounts of these merchants were often kept in terms of both currencies (Littleton and Yamey, 1956, p. 287). Early twentieth century foreign currency accounting A 1900 textbook by George Lisle, an English chartered accountant, describes accounting for foreign currencies at that time in England (Lisle, 1900). Lisle wrote that domestic panies that have branches in foreign countries “should convert the transactions which take place in the various local currencies into pounds sterling on a correct basis, with the view of these transactions being recorded in the Home Book and being submitted in the Annual Abstract of Accounts to the proprietors of the business” (Lisle, 1900, p . 285). He noted that a number of erroneous principles were being used by panies at that time for converting their foreign transactions. According to Lisle, when the trial balance of a foreign branch is sent home, the first thing to be done is to convert each item to pounds sterling (Lisle, 1900, p. 288). He stated that various exchange rates should be used to translate the items in the trial balance. He essentially advocated what later came to be known as the moarynonmoary method. The impact of the First World War on foreign currency accounting Before the First World War, exchange rates were fairly stable and the volume of trade between USA and European nations was not so great as to make the topic of foreign currency translation a major issue in the USA. A number of accounting texts were written after Lisle’s which contain no discussion on the topic. The stability of exchange rates prior to the First World War can be attributed largely to the fact that most nations had established a fixed relationship between their currencies and the gold standard (Roberts, 1920, p. 321). 4 One of the effects of the First World War was to make the shipping of gold practically impossible. As a result, when the USA entered the war in 1917, it chose to go off the gold standard (Gray, 1983, p. 261). By the end of the war, most other nations had also gone off the gold standard (Finney, 1923, p. 451). However, the stability of exchange rates is also dependent on a stable set of trade relations. The First World War upset that stability. The European industries became disorganized and were desperately in need of raw materials that could only be obtained from the USA. Roberts described the situation by stating that “we have seen the European exchange sinking lower and lower from month to month” (Roberts, 1920, p. 325). The exchange rate instability prompted renewed interest in accounting for foreign currency translation in the USA. In 1921, . Finney wrote that accountants would now “have to understand the principles involved in the accounting for foreign merce and the conversion of foreign balances” (Finney, 1923, p. 451). In his discussion of the appropriate methodology for translating the accounts of a foreign branch, Finney advocated the moarynonmoary method that was prescribed by Lisle in 1900 for balance sheet it