Exchange gains and losses, also known as exchange differences, are the result of exchange rate fluctuations. When an enterprise conducts foreign currency transactions, exchange business, period-end account adjustment and foreign currency statement translation, it converts the difference arising from exchange rate accounting of different currencies or different parity of the same currency into the functional currency. Simply put, exchange gains and losses are the differences in the amount of functional currency due to the adoption of different exchange rates in the accounting treatment of various foreign currency businesses. Exchange rate affects exchange rate, which is the price and exchange rate between two different currencies, and also the price expressed by one country's monetary unit in another country's monetary unit. Bookkeeping exchange rate is the exchange rate used to record foreign currency business. Exchange gains and losses are caused by changes in exchange rates. Different kinds of bookkeeping exchange rates and different time of bookkeeping exchange rates will have an impact on exchange gains and losses.

The classification of exchange gains and losses mainly includes: 1. Exchange gains and losses of foreign currency transactions refer to the exchange gains and losses arising from the recovery or repayment of creditor's rights and debts when foreign currency-denominated transactions occur; 2. Foreign currency exchange gains and losses refer to exchange gains and losses between foreign currency and bookkeeping base currency, or between one foreign currency and another; 3. The adjustment of foreign currency exchange gains and losses refers to the exchange gains and losses arising from the adjustment according to the socially recognized exchange rate at the end of the period under the current exchange rate system; 4. Foreign currency exchange gains and losses refer to the exchange gains and losses generated by converting the amount of foreign currency unit of measurement into the amount of unit of measurement in the functional currency at the end of the period.

1. Foreign currency is the abbreviation of "foreign currency", which refers to the currency of other countries or regions other than domestic currency. It is often used for foreign settlement business caused by trade, investment and other economic activities. Foreign currency refers to another currency used in the official currency area or a payment request made in another currency. There are certain risks in storing foreign currency. The foreign exchange trading market is the largest international trading market in the world. In addition to foreign banknotes and coins, it also includes foreign securities held by enterprises, such as government bonds, government bonds, corporate bonds, stocks and dividends expressed in foreign currencies; It also includes foreign currency payment vouchers, such as bills expressed in foreign currency, bank deposit vouchers, postal savings vouchers, etc., and other foreign currency funds, such as various foreign currency remittances, foreign currency payment in import and export trade, etc. Foreign accounts and securities, as well as domestic accounts of foreign currency and foreign currency cash. If the official currency of a region is considered unstable or unreliable in the near future (such as high inflation or political instability), many people will try to use foreign currency as a means of storing value. Large and important economic units (such as foreign trade banks, central banks or governments) also store foreign currency. These foreign currencies can be used to reduce the value impact of currency depreciation, or to promote or simplify international trade, and so on. The government also regards foreign exchange as a means of its economic policy. Some people also use foreign currency to take speculative risks in order to gain profits from exchange rate fluctuations.

There are certain risks in storing foreign currency. If a currency circulates abroad, its circulation rate will decrease, and the quantity in its official circulation area will also decrease. In this case, its official central bank will be forced to increase the number, which will lead to the devaluation of the currency under certain conditions. For example, in 2002, the dollar depreciated 15% against the euro in a short time, which led to the depreciation of the euro zone's dollar foreign exchange reserves.