：
Foreign exchange is the creditor's rights held by the monetary management authorities (central bank, monetary management institutions, foreign exchange stabilization fund and Ministry of Finance) in the form of bank deposits, treasury bonds and long-term and short-term government securities. , which can be used when the balance of payments is in deficit.
Including foreign currency, foreign currency deposits, foreign currency securities (treasury bonds, treasury bonds, corporate bonds, stocks, etc.). ) and foreign currency payment vouchers (bills, bank deposit vouchers, postal savings vouchers, etc.). ).
The translation difference of foreign currency statements refers to the exchange gains and losses arising from the conversion of financial statements prepared by overseas subsidiaries or their branches in the currency of the host country into financial statements expressed in the functional currency.
There are roughly two ways to deal with the translation difference of foreign currency statements:
(1) deferred processing.
Under the deferred method, the conversion difference is included in the owner's equity and reflected in a separate item. Deferred treatment is conducive to maintaining the original proportional relationship of related items in accounting statements and facilitating financial ratio analysis.
(2) Included in the current profit and loss.
The translation difference is included in the profit and loss and in the income statement. The advantage of doing this is that it can truly reflect the exchange rate risk undertaken by enterprises, but it may lead to misunderstanding of accounting statements if unrealized gains and losses are included in current profits and losses.
In addition to the above two methods, there are some methods, such as: recording the translation difference, that is, the debit amount of the translation loss, into profit and loss; Add the credit amount of the translation difference, that is, the translation income, to the deferral and record it in the owner's equity.
There are two ways to price foreign currency exchange rate internationally: direct quotation and indirect pricing.
Simply put, direct quotation is a method to measure the exchange rate by expressing a certain unit of foreign currency with a certain amount of local currency, or converting a certain amount of payable local currency with a certain unit of foreign currency as the standard.
For example, with Japanese yen as the local currency, under the direct price label:
1 USD = 1 10 yen In foreign exchange transactions, the amount of foreign currency expressed by direct quotation is fixed, and the fluctuation of exchange rate is expressed by the change of the amount of local currency. If the amount of foreign currency converted into local currency increases, it means that foreign currency appreciates and local currency depreciates; On the contrary, if the amount of foreign currency converted into local currency decreases, it means that foreign currency depreciates relative to local currency, while local currency appreciates. Simply put, under direct quotation, the greater the exchange rate, the greater the value of foreign currency, and vice versa.