How will accounting statements be exposed to exchange rate changes?
Date:2023-03-04
Accounting statements will be affected by exchange rate changes when a company has business activities that involve foreign transactions. These activities can include sales, purchases, investments, and financial transactions. For example, if a business has a large customer in another country and sells goods in that country’s currency, fluctuations in the exchange rate can affect revenues. Similarly, if a company has a large vendor in another country and purchases goods in that country’s currency, fluctuations in the exchange rate can affect costs. In both cases, these changes in exchange rates will appear in the company’s financial statement as adjustments to their revenues and expenses.
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