For FCV plz validate my entries and also plz tell me where in the scene Balance Sheet Adjustment a/c comes .
Exp Dr 100
To vendor 100
on 31.03.08 due to rise in EX rate
loss on exchange rate Dr 5
To Vendor 5
on 15.04.08 further rise in EX rate
Vendor Dr 105
Loss on exchange Dr 5
To bank 110
Also plz tell me what is the use of reversal of the entry.
This concept of reversal is not mandatory. But, some clients asked for this. This is for generating the exact reports as on date - that means - you have to show the amounts in local currency as on date, but you have done the purchases in different currency, because of the change in the exchange rate the amount payable by you also go up / down. You are showing the reports as on date what is payable amounts in the B/S. To have this you have to recognize the loss/profit even if it is not recognized.