Principle of caution in accounting foreign currency difference at enterprises

Abstract

International economic integration has led to an increase in the use of foreign currencies in Vietnam. Accounting for actual exchange rate differences between foreign currencies has been specifically guided by the Ministry of Finance in the current accounting policies for enterprises (Circular 200/2014/TT-BTC dated 22/12/2014 and Circular 53/2016 / TT-BTC dated March 21, 2016). Accordingly, when recording a foreign exchange increase or decrease (in VND), the enterprice accountant must rely on the bank’s exchange rate, and at each time a transaction arises, the exchange rate issued by banks always comes in two forms: Bank Buys rate and Bank Sells rate. The issue is: depending on the specific nature of each transaction, the accountant needs to decide what exchange rate should be used, and based on what standards? This is an important topic which needs to be researched and discussed in order to improve the quality of teaching and learning the corporate accounting subject.