Forex Gain/Loss in Tallyprime

Forex gain or loss

The rate of exchange keeps fluctuating based on the economic changes across the globe. So, you may have sold a particular set of items or provided service at a certain rate of exchange on a date or time and received payment for the same on a different date or time. In such cases, the rate of exchange may not be necessarily the same at both the points in time. So, your business may experience forex gain or loss due to the fluctuation rate of exchange.

To understanding this, let us take an example.

Consider that your base currency in TallyPrime is INR and the other currency in which the transaction is carried out is USD.

Now, you sold a set of items on 11-May-2022 to a specific customer based in the U.S., and the total amount was $100. 

On 11-May-2022, the rate of exchange was INR 70 per USD, which makes the total amount INR 7000.

The customer makes the payment at a different time on 11-May-2022, 12-May-2022, or later, and the rate of exchange changes to INR 71 per USD.

The change in rate of exchange makes the final billing amount INR 7100. 

So, you made a forex gain of INR 100 on the transaction.

In TallyPrime, you can see such gains and losses as Unadjusted Forex Gain/Loss in Balance Sheet. As per accounting standard, you will need to record a transaction to account for such forex gains or losses. TallyPrime gives you easy way to record these transactions.

Create a ledger for forex gain or loss

To account for forex gain or loss, you need to create a ledger under Indirect Expenses or Indirect Income in TallyPrime. 

Subsequently, you can use the ledger in the Voucher Class using which you can account for forex gain or loss.

Create Journal Voucher Class

Once you create a ledger, you can create a Journal Voucher Class in TallyPrime with that pre-defined ledger. Thereafter, you can record your forex gain or loss using the Voucher Class.

You can create multiple Journal Voucher Class for multiple currencies, if needed. 

1. Press Alt+G (Go To) > Alter Master > type or select Voucher Type> select Journal and press Enter.
2. Specify a Voucher Class name.
   For example, Forex Gain Or Loss.
3. Use Class for Forex Gain/Loss Adjustments: Yes.
4. Select Forex gain or loss ledger, as shown below.
   
5. Accept the screen. As always, you can press Ctrl+A to save.

Record forex gain or loss using Journal Voucher Class

Once you create a Journal Voucher Class in TallyPrime, you can record forex gain or loss.

1. Press Alt+G (Go To) > type or select Create Voucher > press F7 (Journal).
   Alternatively, Gateway of Tally > Vouchers > press F7 (Journal). 
2. Select the Voucher Class created for forex gain or loss.
   TallyPrime will display all the ledgers created to account for forex gain or loss.
   
3. Select the required ledger and enter the amount.
   
4. Accept the screen. As always, you can press Ctrl+A to save.

The adjusted amount will not be displayed in the Balance sheet as it gets transferred to Profit and Loss Account.

If the currency of the ledger and the base currency are same, then the bill-wise details will appear only for those masters while adjusting the Forex Gain or Loss.

View Reports in Foreign Currency

Your business may be based out of a specific country, but it may be a franchise of a multi-national company. In such cases, if you want to share your financial statements with the finance department of your company, then you will need to share it in the currency that the multi-national company uses.

You can view reports in base currency and any other currency created in TallyPrime.

After opening the report, follow the steps given below.

1. Press Alt+A (Alter Column).
2. Select the Currency in which you want to view the report.
   A sample Trial Balance report in the selected currency appears, as shown below.
   

View reports in multiple currencies

You can view reports in multiple currencies on a single screen, making it all the easier for you to share with different branches of your business based out of different locations.

After opening the report, follow the steps given below.

1. Press Alt+C (New Column).
2. Select a Currency.
3. Repeat the above steps for all the currencies in which you want to view the report.

A sample Trial Balance report in the selected currencies appears as shown below.