Settlement and purchase of foreign exchange are two different concepts. Settlement of foreign exchange can be understood as buying foreign exchange and selling foreign exchange at exchange rate. Buying foreign exchange is simply buying foreign exchange.

Difference between foreign exchange settlement and foreign exchange purchase

Buying foreign exchange means buying foreign exchange, and your RMB buys euros. This process belongs to buying foreign exchange. Settlement of foreign exchange is to convert your foreign exchange into local currency. For example, the local currency of our country is RMB, and you have US dollars in your hand. The process of converting US dollars into RMB belongs to foreign exchange settlement. Foreign exchange purchase and settlement are both foreign exchange exchange.

Accounting entries for settlement of foreign exchange

Debit: Bank deposit-RMB (transferred foreign currency × bank purchase price)

Financial expenses-exchange gains and losses (including differences)

Loan: bank deposit-foreign currency (transferred foreign currency × central bank price)

Settlement of foreign exchange refers to the settlement of purchase and sale of foreign exchange by enterprises or individuals according to the exchange rate. According to the needs of import business, professional import and export companies buy foreign exchange from professional foreign exchange banks in their own currency according to the foreign exchange quotation published by the state, or sell the foreign exchange obtained from export to foreign exchange banks at the quotation price and convert it into their own currency. This behavior is called foreign trade settlement. China's foreign exchange quotation regulations are published daily by the Bank of China, and foreign exchange management is also carried out by the Bank of China. There are buying price and selling price. The selling price is higher than the buying price, and the difference between them is the handling fee of bank exchange, or exchange income.

Accounting entries for purchasing foreign exchange

Debit: bank deposit-foreign currency account (foreign exchange purchase amount)

Financial expenses (handling fees, etc.). )

Loan: bank deposit-RMB (bank selling price × foreign exchange purchase amount)

When purchasing foreign exchange, it shall be accounted for and recorded according to the real-time selling exchange rate published by the foreign exchange purchasing bank, and the expenses incurred shall be included in the "financial expenses" account, which accounts for the expenses incurred by the enterprise to raise funds needed for production and operation, including net interest expenses, net exchange losses, handling fees of financial institutions and other expenses incurred to raise funds for production and operation. The debit of this account indicates the financial expenses incurred in the current period, the credit indicates the reduction of the financial expenses incurred, and the ending balance is generally in the debit, indicating the financial expenses incurred in the current period.