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Effect of Foreign Currency Accounting Instruction on Students’ Ability to Record Transactions Denominated in Foreign Currencies in Nigerian Universities

Abstract

Foreign currency accounting instruction is an important component of accounting education because it equips students with the knowledge and skills required to appropriately record business transactions denominated in currencies other than the entity’s functional currency. Students’ ability to record foreign currency transactions accurately is essential for maintaining reliable accounting records and preparing meaningful financial information. However, students may experience difficulties in applying exchange rates, determining appropriate transaction values, and recording foreign currency transactions correctly. This study therefore examines the effect of foreign currency accounting instruction on students’ ability to record transactions denominated in foreign currencies in Nigerian universities. Foreign currency accounting instruction involves teaching students the principles, procedures, and accounting treatments associated with transactions conducted in foreign currencies. The instruction exposes students to concepts such as foreign currency transactions, exchange rates, functional currency, transaction dates, exchange differences, and the conversion of foreign currency amounts into the reporting currency. It also provides students with opportunities to practice recording purchases, sales, receipts, payments, and other transactions involving foreign currencies using appropriate accounting procedures. Students’ ability to record transactions denominated in foreign currencies refers to their capacity to analyze foreign currency transactions, determine the appropriate exchange rate and equivalent reporting-currency amount, and make accurate accounting entries. This includes identifying the relevant transaction date, applying appropriate exchange rates, calculating the equivalent amount, and recognizing exchange differences where applicable. Adequate competence in this area is necessary for students to develop practical accounting skills and accurately handle international business transactions. The study will adopt a survey research design. The population will comprise Accounting Education students in selected Nigerian universities. Data will be collected using a structured questionnaire designed to obtain information on foreign currency accounting instruction and students’ ability to record transactions denominated in foreign currencies. The instrument will be subjected to appropriate validation and reliability procedures before administration. Data collected will be analyzed using descriptive and inferential statistics, while the hypothesis will be tested at a 0.05 level of significance. The study is expected to establish that foreign currency accounting instruction has a significant positive effect on students’ ability to record transactions denominated in foreign currencies. Effective instruction is expected to improve students’ understanding of exchange rates, transaction measurement, currency conversion, exchange differences, and appropriate accounting entries, thereby enhancing their accuracy in recording foreign currency transactions. The findings are expected to have important implications for the teaching and learning of financial accounting in Nigerian universities. Accounting lecturers may need to incorporate practical foreign currency transaction exercises, exchange-rate calculations, worked examples, and realistic business scenarios into classroom instruction. Regular practice involving different foreign currency transactions may help students connect accounting principles with the practical requirements of international business activities. The study is expected to benefit Accounting Education students, accounting lecturers, university administrators, curriculum developers, and other stakeholders in accounting education. Students may develop stronger practical competence in recording foreign currency transactions, while lecturers may gain useful insights for improving instructional strategies. Curriculum developers may also use the findings to strengthen foreign currency accounting content and practical transaction-recording activities within accounting education programmes. The study recommends that accounting lecturers should adopt practical and learner-centred approaches when teaching foreign currency accounting. Greater emphasis should be placed on exchange-rate exercises, transaction analysis, currency conversion activities, practical journal entries, and case-based assessments involving foreign currency transactions. The study concludes that effective foreign currency accounting instruction can improve students’ ability to accurately record transactions denominated in foreign currencies and contribute to stronger practical accounting competence.

Keywords: Foreign Currency Accounting, Foreign Currency Transactions, Accounting Instruction, Exchange Rates, Currency Conversion, Transaction Recording, Exchange Differences, Functional Currency, Reporting Currency, Financial Accounting, Accounting Education, Journal Entries, International Transactions, Accounting Procedures, Accounting Competence