Forex Accounting (Accounting For IT Industries)
Forex Accounting is the term given to Foreign Exchange Accounting that refers to the process of recording the transactions between different currencies. The transactions are recorded in the functional currency as per the exchange rate at the date of completion of a transaction.
With the rapid development in the IT sector, there has been an accelerated change observed in the structure of global and domestic forex markets. Liberalization and the development of currency and forex derivatives have even pushed the RBI to revise its policy of Internal Control Over Foreign Exchange Business.
Forex accounting is carried out through a dealing department which includes dealers, mid, and back-office staff. The staff is responsible for following and tracking the deals made by dealers in foreign currencies.
Forex Accounting and Compliances in India
During a foreign currency exchange, the dealers need to observe the compliances followed in India. RBI lays down these regulatory requirements. According to the regulations, the dealers need information about the transaction in written form.
For any sector, one needs to follow the accounting standards for all foreign currency income and expenditure. It includes a reevaluation of outstanding liabilities and assets in foreign currency.
Forex Accounting and IT industry
As India grows to become an IT hub, the services provided by the IT industry are continuously enhancing the foreign currency inflow in India.
As with other sectors, forex accounting is an essential aspect of accounting in the IT industry to understand its finances better and streamline the expenses.
With sole trader accounting software such as Ankpal, one can ensure that the invoices of their IT company are maintained. Along with it, the sales report provided by the software can ensure that one keeps track of the receivables.
Forex Accounting: Online Course
Forex accounting is a highly specialized function that needs proper training and an immense knowledge base about the respective industry.
The online course offered at Ankpal, a leading trading accounting software in India, provides a practical outlook. The program has been initiated to provide practical and accurate guidance so that the learners can determine functional currency along with understanding the principles and reporting transactions that involve changes in foreign exchange rates.
The course will guide the learners through the step-by-step method of preparing the cash flow statement that involves foreign exchange and handling foreign exchange derivatives. Along with that, it will also detail the effect of hyperinflationary effects on foreign exchange operations.
The trainer employs various case studies and real-life examples to illustrate the issues and clear the doubts arising in foreign exchange accounting and resolve them.
The course is offered in three formats:
Basic (free)
Intermediate
Advanced
The learners can avail numerous videos that detail the course outline for free under the basic plan. For an in-depth and complete course outline, one will have to buy the intermediate or advanced plan.
The outline of the course is as follows:
Introduction to the effects of changes that occur in foreign exchange rates.
Accounting the differences that occur in the foreign exchange rate in a company’s financial statement.
Difference between the functional and presentation currency of the entity.
The impact of foreign exchange differences on business combinations and fair value adjustments.
Translation of functional currency of a subsidiary in different forms of presentation currency of the group.
Accounting the difference in foreign exchange that is caused by the net investment in foreign subsidiaries.
Statement of cash flow and effect of foreign exchange on it.
Foreign exchange derivatives and their accounting.
Foreign currency risk disclosure and disclosure requirements.
