Handling Exchange Losses & Gains in NEOSYS
Many a times, the foreign exchange rate fluctuates and hence there is a difference in the invoice currency amount issued or received as compared to the actual payment received or paid.
Hence NEOSYS handles these differences and allots the amount to a Exchange Loss or Gain A/c.
Below is an example of a sale which has been done:
Furniture is purchased from a supplier for 100STG on 1/1/2007. On this date the exchange rate was 1 STG=7 AED. An invoice is received from the supplier and posted as below.
The supplier is paid on 1/2/2007. However the exchange rate on this day has changed to 1 STG=7.5 AED. Hence there is a loss of 50 AED when we make this payment due to an increase in the exchange rate. NEOSYS automatically notices this and does the following:
- Allocates the payment of 100STG (750AED) to the supplier invoice in the supplier a/c
- Credits the 50AED from the allocation which is overallocated to the supplier invoice
- Debits the Exchange Loss or Gain A/c (EXDI in this case)
The following are the ledger printouts of all the accounts which are involved in this transaction:
