Exchange Gains And Losses Confirmation Method To Improve The Accounting Management And Exchange Rate Risk

July21,2005, China officially launched a managed floating exchange rate system, basedon market supply and with reference to a basket of currencies, until July15,2011, duringthe six years of the reform of the RMB exchange rate mechanism, the RMB against thedollar rate of22.41%, showing the inevitability, persistent and progressive features ofRMB against the U.S. dollar. The actual exchange rate fluctuations become a problem offoreign enterprises can not be ignored, on the one hand, working out the accountingprocess of exchange gains and losses in the highly volatile exchange rate as soon aspossible has been a priority, on the other hand the volatility of the exchange rate makeenterprises to realize the importance of awareness and ability to hedge foreign exchangerisk. Exchange gains and losses arising from exchange rate fluctuations, making foreignenterprises industry differentiation obviously. At the same time, exchange gains and losseshave a serious impact on corporate profits and cash flow, corporate financial dataanomalies. Seen in this light, the accounting process of existing foreign currencytransactions can not adapt to the real needs, exchange gains and losses in accountingmethod needs to be improved. In addition, companies should raise the awareness ofexchange rate risk, and have a comprehensive understanding of the exchange rate riskaversion method to ensure that exchange gains and losses accurately reflect the financialresults and results of operations, and finally improve the quality of accounting information.This article first analyzes the reasons and trends for appreciation of the RMBexchange rate reform in order to reflect the instability of exchange rate fluctuations. Underthe exchange rate movements, making theory factor analysis and descriptive statisticsagainst exchange gains and losses from different industries, confirming the difference ofimpact from exchange rate changes in foreign exchange gains and losses.This article based on the impact of exchange gains and losses, further study of theproblems of the current exchange gains and losses accounting treatment. Against theexisting foreign currency accounting process influence to total corporate profits and cashflow, China Railway Group, for example, through the analysis of corporate accounting data,listing the influence of exchange rate changes using the current exchange gains and losseson the financial situation of enterprises. Finally, proposes how to fix the recommendationsof the current exchange gains and losses in accounting method, and the current accountingmethods reasonable comparison, highlighting the correction program.Finally, still from the problems of China Railway Group facing the risk of foreignexchange, to reveal the essence of the risk of foreign exchange accounting and accountingof foreign exchange risk avoidance strategy. Not only summed up the internationallyaccepted means of prevention, but also put forward in China’s exchange rate riskprevention.