How To Determine The Standard Currency Of Enterprise Bookkeeping

China's "accounting law" stipulates that one of the units whose business income and expenditure is mainly currencies other than Renminbi can be selected.

The accounting law allows enterprises to choose non Renminbi as the bookkeeping standard currency. However, how to choose it is not specified in the accounting law.

And stipulates the factors to be considered in determining the bookkeeping standard currency.

In choosing a bookkeeping standard currency, an enterprise should consider the following factors:

First, the currency mainly affects the selling price of goods and services, usually using the currency to calculate and settle the selling price of goods and services.

If a domestic company is a trading company, more than 90% of its sales revenue will be calculated and settled in Renminbi.

RMB is the currency that mainly affects the selling price of goods and services of a company.

Two, the currency mainly affects labor, material and other expenses for goods and services, usually in the currency for valuation and settlement.

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In practice, enterprises should generally consider the two factors mentioned above rather than considering only one of them.

The three is the funds obtained from financing activities and the money used to save money from business activities.

In some cases, it is difficult for an enterprise to set up a bookkeeping standard currency according to its income and expenditure. It is necessary to combine the funds obtained from financing activities or the money used for collecting money from business activities on the basis of revenue and expenditure, and make a comprehensive analysis.

[C] the domestic company is a self export enterprise of foreign trade, and more than 70% of its business revenue comes from exports to the European Union countries. Its selling price is mainly affected by the euro and is priced in euros. Therefore, from the angle of affecting the selling price of goods and services, the company should choose the euro as the bookkeeping standard currency.

If the company has purchased the factory facilities and 30% of its labor costs in Renminbi, the raw materials, machinery and equipment and more than 70% of the labor cost will be purchased in the EU market in euros.

However, if the company's labor costs, raw materials and the corresponding plant facilities, machinery and equipment more than 95% of the purchase and valuation in Renminbi, it is difficult to determine whether the company's bookkeeping currency should choose euro or RMB, but also need to combine third factors to determine.

If the euro's operating income earned by the company is directly converted into Renminbi deposits when it is repatriated to the mainland, and the company has hedged the foreign currency risk generated by the euro fluctuation, the company can determine its currency of the bookkeeping standard is RMB.

For example, Ding is a domestic infant formula milk processing enterprise. Its raw milk comes from Australia. The main processing technology, machinery and equipment and main technical personnel are supplied by the Australian side, and the infant formula milk powder is sold to the domestic market.

Based on first, second factors, it is difficult for an enterprise to determine the bookkeeping standard currency.

Third factors need to be considered.

Assuming that the demand for Australian dollars for raw materials such as milk is met, Ding will borrow a 1 billion Australian dollar from a bank in Australia for a period of 20 years, which is 4 times the net liquidity of the company in the current period.

Since the purchase of raw materials is based on the Aussie settlement, and the capital needed for the operation of the enterprise is also used in the financing of the Australian dollar, the Ding company should use the Australian dollar as the bookkeeping standard currency.

What needs to be explained is that when determining the bookkeeping standard currency of enterprises, the importance of the above factors is different from that of the specific circumstances of the enterprises. It is necessary for the management of the enterprises to judge according to the actual situation. However, this does not mean that the management level of the enterprise can be arbitrarily chosen as the bookkeeping standard currency according to the needs, but based on the actual situation, only one currency can be found in the bookkeeping standard currency.