Accounting entries for forex transactions motive
Pl provide me with study material links on the same. Also if you can explain me the account determination. it will be good.Though its basic, its required for my better understanding.Thankskamala. When you enter a journal entry in a foreign currency, the system calculates the domestic currency amount. Foreign currency transactions may result in receivables or payables fixed in the amount of foreign currency to be received or paid. A foreign currency transaction requires settlement in a currency other than the functional currency.
Wccounting change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. Request you all to guide me.Mr. B ror and sells goods in dollar currency. Say, rate available on 30-03-12 is Rs. 51.155)Since rate is higher than rate on 05-03-12, he has tansactions gain i.e.
more receivable from Mr. A in rupee terms.