recording in journal

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2011 how to record the transaction when we exchange two currencies. like
$1000 we receive and we Rs.45000
how will we record this transaction in journal.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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29 January 2011 You have to maintened your books as per reporting currency, IF any ERV is comming it has to be booked in P/L account.

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Querist : Anonymous

Querist : Anonymous (Querist)

29 January 2011 thank you sir but i could not understand i meant if we record entry it will be dollar a/c dr. which comes in and Rs. a/c credit will be credited which goes out,but problem is one is 1000 and another 45000 which is against the rules. this is for those who's business is exchange of currency and i am not talking about profit but about the whole process of what comes in and what goes out.

Vivek Raju P

Vivek Raju P (Expert)
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30 January 2011 You will maintain your accounts in only one currency, either in USD or INR.

So if you exchange USD for INR. You might have already expressed the USD it in INR in your Drs or bank balance, so what you will book now is only the gain or loss on realisation and nothing more.

Even if you hold USD in bank account like EEFC, that value will be converted in INR and shown in your financial statements.

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