Multi currency related to foreign currencies in the present day is increasingly becoming a concern. Moreover, the existence of globalization in this day and age is in favor of increasing attention to foreign currencies. Transactions made with foreign currencies are now increasing in number. Even in every country, it is now possible for these transactions to occur. In each country, it seems that there are not only transactions that can be done with their currencies.
However, there are also some transactions involving foreign currencies. Usually, this is related to export and import activities by several companies. In this transaction, of course, the use of foreign currency is carried out to support the smooth running of these activities. That is why this understanding of foreign currency needs to be possessed by business people. To find out more about multi-currency, you can see the explanation below.
About Multi Currency
In addition, companies involved with foreign currencies also need to understand other things. For example, matters related to accounting records using foreign currencies. All of these things need to be understood if indeed your company is carrying out transactions that use foreign currency. As for transactions like this, they can also be found more in many companies. More and more transactions are carried out using foreign currency in various companies. What’s more, this matter has been stipulated in regulations.
As we all know that the use of foreign currency today is increasingly rampant. More and more companies are making transactions and involving the use of foreign currency. Finally, a multi-currency system was developed that was designed to present reporting on the use of foreign currencies.
Multi Currency Financial Statements
It means that all transactions carried out involving the use of foreign currency will be recorded in the reporting. In this case, the preparation of financial statements for the occurrence of each transaction should be made correctly and precisely. At least these financial statements are made with a design that tends to be flexible.
Of course, there are advantages in this matter so that financial statements can function as much as possible. The creation of financial statements on the use of foreign currency is also needed by the company. For this reason, multi currency reports can be prepared properly to answer the needs of the company. There are many functions of this financial statement.
Among them is to be informed about all transactions involving foreign currencies. Making a report will also allow the company to provide predictions about the steps to be taken. Until the taken steps by the company can be appropriate even in a state of rupiah fluctuations that change every time. So the continuity of the company can continue to run without any obstacles, including transactions with foreign currencies.
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Multi Currency Recording Method
There are two types of recording foreign currency transactions used in various companies. These methods include single currency and multi-currency, among others. The single currency itself is a method of recording foreign currency transactions into the base currency. What is meant by the base currency, in this case, is the currency used in the country that made the transaction.
The second method is multi currency which is currently being discussed. The multi-currency recording is the recording of transactions by directly recording transactions using foreign currencies. Bookkeeping is made on transactions made into the respective currency in use.
So recording includes all transactions that use the currency of the country of origin. The process of making reports also uses an intermediary account. So whoever is in charge of making this report must master it the right way. Moreover, the recording process also involves foreign currency exchange rates.
Not infrequently, the recording of transactions in financial statements causes exchange rate differences. Of course, this is quite difficult to do. But still, this recording must be able to detect the difference between profit and loss. Especially the profit and loss of the difference in the exchange rate used. For this reason, it is necessary to revalue precisely the part of the recording.
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Taxes from Multi Currency Transactions
Multi currency involving the use of foreign currency may seem quite complicated at first glance. It’s not just the making of financial statements. But the tax calculation of this transaction may also pose its complex. The use of foreign currency in every transaction can of course also affect tax reports. However, the recording of this tax report is required to use rupiah currency.
However, it is also possible that this report uses foreign currency if it is following some of the conditions imposed. For example, for taxpayers who do invest in foreign capital. Or maybe the related company has a relationship and affiliation directly with the parent company originating from abroad.
Many other things allow the recording of tax reports in foreign currencies. In this case, the tax manager provides rules regarding the exchange rate. Until the creation of tax invoices, it should also follow the exchange rate set by the tax party.
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So for those who have a company, you should indeed understand this well. Even more so if this transaction of multi-currency is carried out using foreign currency. Its manufacture requires thoroughness to avoid mistakes. If you need help, then you can choose the most appropriate software so that the preparation of reports and taxes can be right.