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Index
Introduction..................................... ....................................3
Introduction
In the globalization environment business empire are growing across the borders,
entire world is single market for company. Indian business enterprises spreading
their activities across the world. Being the part of the world market is not going to
be easy there are cultural difference, legal issues and currency and settlement
issues.
If foreign currency transaction is settled in on the date of transaction one can easily
record the transaction as per current spot price of foreign exchange but when
transaction is carried forward there we need to study the effects of foreign
transaction due to changes in foreign currency valuation.
In India for the accounting purpose foreign activities of an Indian enterprise are
divided in to two categories.
The two principal accounting issues common to both types of activities relate to the
choice of the rate of exchange to be issued and the manner of dealing with the loss
or gain arising from the differences in the exchange rates.
However, this solution is not feasible because these options are not available when
company purchase or sales in foreign exchange transactions.
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