Foreign exchange gain/loss

This query is : Open

CA Sumit Ramesh Bharadia (Querist)
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07 December 2012 During the normal course of business,Goods are purchased from foreign country in foreign currency.
What is the treatment of difference in exchange difference?
The foreign exchange gain/loss account is a direct or indirect income or expenses. Basis for classification into direct or indirect.
During the year end, what is the treatment of unpaid invoices?

V K Bajaj

V K Bajaj (Expert)
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08 December 2012 a. The difference be written off under the head 'fluctuation in currency' or any similarly worded.

b. indirect income or loss.

c. In case goods received but not paid to seller then the amount be debited to purchases and credit to seller. The currency rate be applied as was on the date of your receipts of goods.