Exchange gains and losses refer to the difference between the foreign exchange quotation at the time of contract (or settlement) and the current (daily) foreign exchange quotation, which is generally calculated at the time of settlement or at the end of the period and recorded in the subject of "financial expenses-exchange gains and losses". The reason for exchange gains and losses is that the functional currencies of accounting in different countries are different. According to Chinese regulations, the functional currency of bookkeeping is RMB.

If it is a supply and marketing contract, exchange gains and losses will be calculated on the settlement date; If it is a capital account, exchange gains and losses are calculated at the end of the period.

Exchange gain/loss = foreign exchange quotation stipulated in the contract-foreign exchange quotation on the settlement date (generally using the middle price)

Accounting entries:

1. When the payment is made (according to the foreign exchange price stipulated in the contract)

Borrow: raw materials/goods in stock (payment for goods+related miscellaneous expenses)

Taxes payable-VAT payable (input tax)

Loans: bank deposits-foreign exchange accounts

2. Carry forward exchange gains and losses (assuming that the exchange rate announced by the central bank on the settlement date is lower than the contract price, that is, depreciation).

Debit: financial expenses-exchange gains and losses

Loans: bank deposits-foreign exchange accounts

If it appreciates, the opposite entry