Exchange Diff (Loss or Profit )?????

 Where to show Loss or Profit in the (Profit & Loss Account ) or in the (trading Account)................................

Replies (4)

Depends on what item the exchange difference is there.

If it is on sales it will increase or decrease your sales.

if it is on purchase or on expensesit will increase or decrease the expense or purchase.

Say it is on capital account like a deferred payment for machinery, it will adjust or reduce the cost of the capital equipment or machinery.

IT SHOULD BE SHOWN IN INCOMe FROM EXTRAordinary items, below the p\l accout. or can be shown in that accont also. 

Exchange difference should be  shown separately as extraordinary item.

Normally a single account can be opened as ExchangeLoss/Gain - In this neither plus(gain) or minus(loss) can be accounted in the same heading & willbe shown in the Trial Balance at the end of the year the real fact ie., Gain/Loss as the case may be depends upon the end balance.

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