Accounting for Foreign Exchange Differences and Foreign Currency Transactions in Foreign Economic Activity: Typical Errors, Accounting Policy, and Tax Risks

Abstract

The purpose of the article is to investigate the specific features of accounting for foreign exchange differences and foreign currency transactions in the foreign economic activity of enterprises, identify typical accounting and tax reporting errors, and substantiate approaches to minimizing tax risks through the development of an effective accounting policy. Methods. The study employs methods of theoretical generalization, system analysis, comparative analysis, logical generalization, and regulatory and legal analysis to examine the economic essence of foreign currency transactions, the mechanism of foreign exchange difference formation, and the practice of their accounting treatment. Results. It has been established that foreign currency transactions constitute a complex object of accounting, as they combine financial, tax, and currency-regulatory aspects of an enterprise's foreign economic activity. It has been determined that foreign exchange differences arise as a result of the revaluation of monetary items under the influence of exchange rate fluctuations and directly affect financial results, liquidity, and financial stability of business entities. The study reveals that insufficient consistency between accounting, tax, and currency legislation complicates the practical application of accounting procedures and increases the risk of financial statement misstatements and incorrect determination of tax liabilities. It is substantiated that errors in recording foreign currency transactions may lead to significant distortions in financial results, increased tax risks, and the imposition of financial penalties. The research argues that an effective accounting policy for foreign currency transactions should be based on the timely revaluation of monetary items, proper documentary support of transactions, and the consistency between accounting and tax reporting systems. Conclusions. It is concluded that improving the quality of accounting support for foreign currency transactions is a necessary condition for ensuring the reliability of financial reporting, minimizing tax risks, and strengthening the financial security of enterprises engaged in foreign economic activity.