For foreign companies, when trading in China, it often happens that the domestic currency is converted into RMB, such as converting US dollars into RMB. How to compile accounting entries for the difference in the conversion process?

Accounting entries of the difference between the US dollar and RMB.

1, the difference between USD and cash is positive:

Debit: Bank deposit-RMB

Loan: Bank deposit-USD

Financial expenses-exchange difference

2. The price difference between dollar and cash is negative:

Debit: Bank deposit-RMB

Financial expenses-exchange losses

Loan: Bank deposit-USD

Accounting entries for RMB to USD

When foreign currency and RMB exchange gains and losses, the difference between the price adopted by the bank and the exchange rate on the book is exchange gains and losses.

Specific accounting treatment methods:

Borrow: bank deposit (foreign currency, according to the bookkeeping exchange rate, you can go to the State Administration of Foreign Exchange to check the exchange rate of the day and calculate the RMB figure)

Financial expenses (debit and credit difference, if the debit is greater than the credit, it is exchange gain, which is indicated in red, and if the debit is less than the credit, it is exchange loss, which is indicated in blue).

Loan: Bank deposit (RMB, actual payment figure)

What is a bank deposit?

Bank deposit is the currency deposited in the bank, and it is an integral part of monetary funds. According to the provisions of China's cash management system, every enterprise must open a deposit account with the People's Bank of China or a specialized bank for deposit, withdrawal and transfer settlement. Except for a small amount of cash within the prescribed limit, the monetary funds of the enterprise must be deposited in the bank. Bank deposits of enterprises mainly include: settlement account deposits, letter of credit deposits, foreign deposits, etc.

Borrowing direction of bank deposits

The borrower's bank deposit means that the enterprise's bank deposit increases, and the lender's bank deposit means that the enterprise's bank deposit decreases.

What are the financial expenses?

Financial expenses refer to the expenses incurred by enterprises to raise funds needed for production and operation. Specific items include: net interest expenditure (the difference between interest expenditure and interest income), net exchange loss (the difference between exchange loss and exchange income), handling fees of financial institutions and other expenses incurred for raising production and operation funds.