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Exchange Rate Differences-the Accounting Treatment and its Influence on the Financial Performance of an Economic Entity

Author

Listed:
  • NICOLETA CRISTINA MATEI

    (Economic Sciences Department „Nicolae Titulescu” University)

  • ANDREEA PAULA DUMITRU

    (Economic Science Departament Nicolae Titulescu University)

Abstract

Currency rate differences arise when there are certain debt rights or obligations in foreign currency of an economic entity which are collected i.e. paid for at a different course from the one displayed by the Romanian National Bank on the date of their establishment. Such differences, according to the situation, generate expenditure or revenue which affects a company's financial result and, consequently, the accountant result as well. The results registered by an economic entity presented in the Profit and Loss Account provide information about its financial performance. This performance can be influenced by the favorable or unfavorable exchange rate differences existing when an economic entity carries out transactions or has incurred foreign currency loans having a significant share in the total amount of transactions or in capitals. The present paper shows the accounting treatment of the exchange rate differences and its impact on the financial performance.

Suggested Citation

  • Nicoleta Cristina Matei & Andreea Paula Dumitru, 2016. "Exchange Rate Differences-the Accounting Treatment and its Influence on the Financial Performance of an Economic Entity," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 4(2), pages 58-65, November.
    • Handle: RePEc:ntu:ntugeo:vol4-iss2-16-058
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