what is Accounting for Foreign Currency Transactions

Q: Explain the foreign currency swaps and why are they undertaken? Explain the functional currency and…

A: A foreign currency swap, also known as an FX swap, is an agreement between two foreign parties to…

Q: What adjustments might be made due to exchange rate riskand political risk to the domestic cost of…

A: The question is based on the concept of international risk management in cost of capital. An…

Q: What are forward contracts? How can they beused to manage foreign exchange risk?

A: Risk refers to the uncertainty regarding the implications of any activity.

Q: How does the timing of hedges of (a) foreign currency denominated assets and liabilities, (b)…

A: The three terms are differentiated based on the time when the price or the foreign exchange rate is…

Q: ways to mitigate risks when analysing foreign financial statements.

A: The financial statements of a firm includes income statement, statement of financial position,…

Q: What are the differences in accounting for a forward contract used as a cash flow hedge of (a) a…

A: Cash flow hedge of a foreign currency denominated asset or liability: For a cash flow hedge of a…

Q: What causes balance sheet (or translation) exposure to foreign exchange risk? How does balance sheet…

A:

Q: What is foreign trade balance?

A: Answer: A foreign trade balance is nothing but the net dollar value of commodity exports minus…

Q: In what way is the accounting for a foreign currency borrowing more complicated than the accounting…

A: The accounting for a foreign currency borrowing involves keeping track of two foreign currency…

Q: Who are the players in the foreign exchange market?

A: The currency market, often known as the foreign exchange market, is a global decentralized or…

Q: Define domestic currency

A: The domestic currency is a currency that is the local currency for every country. Every Trade…

Q: Give at least 3 types of transactions or activities that result in the supply for foreign currency

A: Given information : In simple words, the foreign currency for a country is the currency which is not…

Q: What factors create a foreign exchange gain on a foreign currency transaction? What factors create a…

A: Factors creating foreign exchange Gains or losses: 1) Having an exposure of receivables and payable.…

Q: What are some of the transactions or activities that results in the demand of foreign currency

A: In an economy or in a country there are different economic and commercial transactions that lead to…

Q: Discuss how foreign exchange market provide insurance against foreign exchange

A: Foreign exchange risk or exchange rate risk, is an unavoidable risk of foreign investment, caused by…

Q: Describe about the foreign currency risk.

A: Foreign currency- As we know every country has its own currencies in which it operates. Hence,…

Q: What is foreign currency?

A: In terms of finance, foreign currency is a familiar term in FOREX (Foreign Exchange) transactions.

Q: In export transactions, the export price collected in advance from foreign buyers is recorded into…

A: In export transactions, the export price collected in advance from foreign buyers is recorded into…

Q: Foreign exchange risk arises when: A)business transactions are denominated in foreign currencies.…

A: Foreign exchange risk: Foreign exchange risk refers to the loss that arises due to the international…

Q: Describe guidelines for determining when foreign currency financial statements are to be translated…

A: The Current rate method applies the current exchange rate as on the balance sheet date while…

Q: What is the subsequent measurement of foreign currency denominated monetary items Closing rate…

A: Monetary items are those which are in the form of money or can be measured in the form of currency.…

Q: How do you determine and calculate return and risk on foreign exchange transactions

A: Foreign exchange transactions are those transactions which are undertaken between citizens of one…

Q: characterize foreign currency transaction risk, including accounting for and disclosing profits and…

A: You must use an international commerce channel if you wish to purchase or sell anything in another…

Q: What is reformatting in Restating Foreign Financial Statements to U.S. GAAP? Discuss it.

A: Introduction: The Generally Accepted Accounting Principles (GAAP or US GAAP) are a set of widely…

Q: EXPLAIN THE MODE OF PAYMENT IN FOREIGN CONTRACTS.

A: A foreign exchange contract is a legal arrangement in which the parties agree to exchange a defined…

Q: What is that determines the relationship between spot abd forward foreign exchange rates?

A: The exchange rate between two currencies is the number of units of one currency per unit of the…

Q: Describe the major actors in the foreign exchange market and their roles

A: The foreign exchange market is also known as the Forex, it is a market for the changing home…

Q: describe foreign currency transaction exposure, including accounting for and disclosuresabout…

A: International trade is the mechanism through which the goods and services of one country are bought…

Q: what are implications for analysis of financial statements that result from the accounting for…

A: As per IAS 21 if any has an operation in a foreign country then the financial statements of such an…

Q: What are the two major issues related to the translation of foreign currency financial statements?

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: Explain the rule for translating the Financial Statements of Foreign Operations from Local Currency…

A: Overseas currency translation is the accounting process by which an international company converts…