If you have an outstanding USD invoice raised two months ago and the USD/INR rate has moved significantly since then, your Accounts Receivable balance in Zoho Books reflects the old rate. The current market value of that receivable is different. Currency adjustment revalues it to the current rate so the Balance Sheet shows the correct INR value. Without this adjustment, your Balance Sheet overstates or understates foreign currency assets and liabilities.
Go to Accounting, then Currency Adjustments, and click New Adjustment. Set the adjustment date (the last day of the reporting period, such as 31 March). Select the accounts to revalue: typically the Accounts Receivable account, the Accounts Payable account, and any foreign currency bank accounts. Enter the closing exchange rate for each currency. Zoho Books calculates the difference between the current INR value and the previous INR value and posts a journal entry for the net gain or loss to the Foreign Exchange Gain or Loss account. Confirm and save.
Under the Companies Act and Indian accounting standards (Ind AS 21 or AS 11), monetary foreign currency items must be translated at the closing rate at each Balance Sheet date, with exchange differences recognised in the P&L. The annual currency adjustment in Zoho Books gives your CA the journal entry needed to comply with this standard, showing the correct revalued balance on the 31 March Balance Sheet.
A currency adjustment in Zoho Books revalues open foreign currency receivables, payables, and bank balances at the current exchange rate, with gains or losses posted to the foreign exchange account to keep the Balance Sheet accurate.
Go to Accounting, then Currency Adjustments, click New Adjustment. Set the date, select accounts to revalue, confirm the exchange rates. Zoho Books posts the adjustment journal entry automatically.
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