SAP Closing Transaction Codes
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In this section we are going to understand below points about currency and exchange rate in sap. Currency in which financial reports need to be prepared for local authority, e. Indian company code will have local currency INR. Maintained at company code level. Maintained on the screen where company code is defined. Currency in which business transaction takes place e. Indian company code doing export to European customer.
Document will be posted in euro currency. Document currency is entered at the time of document posting. Some countries which are economically unstable and have high inflation prepare their financial reports in currency other than company code currency. This other currency is referred as hard currency in sap.
If currency types are configured for a company code: How to set up different currency types for a company code? For document currency or transaction currency, no configuration is required. In a ledger leading or non-leading ledgers maximum three currency types are allowed.
First local currency LC1 is by default company code currency and cannot be changed. Second local currency LC2 is usually group currency using LC2 is optional.
Third local currency LC3 can be hard currency or index based currency using LC3 is optional. First local currency LC1 is by default first local currency of leading ledger or company code currency. Second local currency LC2 is vendor ledger report in sap tcode for exchange rates group currency. Using LC2 is optional. Third local currency LC3 can be hard currency or index based currency.
Using LC3 is optional. Currencies other than which are used in leading ledger cannot be used in non-leading ledger. Below picture shows configuration of currency types in a ledger T code: To understand currency conversions in sap we need to understand below terminologies.
Hence different exchange rate is used for different purposes. Exchange rate is maintained per exchange rate type as shown below. Hence different exchange rate types can be used for different business transactions. Whenever a currency conversion has to happen, first thing decided by system is what exchange-rate-type is going to be used. Exchange-rate-type to be used is maintained on the same screen where you are defining parallel currencies for ledger. First local currency LC1 is derived from transaction currency exchange using rate type M.
Second local currency LC2 is derived from first local currency LC1 using exchange rate type By default sap uses exchange rate type M for most of the currency conversions. But sometimes a different exchange rate type is required for specific business transaction. This is achieved by maintaining exchange rate type in document type definition itself. This particular document type will use exchange rate type assigned to it.
Sap can handle at most 5 decimal places hence above will get treated as. Sap mandates that for every pair of currency, translation ratio has to be maintained. Here USD is made the reference currency. All currency rates are maintained against USD.
This way vendor ledger report in sap tcode for exchange rates rate between any pair of currency can be derived using reference currency USD. What the benefit of using reference currency? Benefit is less number of exchange rate entries to be maintained. Suppose there are different currencies involved, hence exchange rate is to be maintained for pairs of currency.
But by using reference key, only currency pair needs to be maintained. Assume main company is in Europe and Indian subsidiary company sold product to customer in Switzerland.
Here you can see, exchange rate is maintained using translation ratio. Exchange rates between currency pairs getting derived using reference currency USD. Hope this example explains how currency calculation happens in sap. What is the need of having so many currency types in sap? How these currency types are configured in sap?
What is exchange rate type in sap? What is the use of currency translation ratio and how it helps in maintaining exchange rate? What is the use of reference currency in maintaining exchange rate between currencies?
How currency exchange vendor ledger report in sap tcode for exchange rates is maintained in sap? Company code currency or local currency: Transaction currency or document currency: Maintained at client level. Maintained at country level.
Cannot be vendor ledger report in sap tcode for exchange rates Second local currency LC2 is usually group currency.
Above example can be represented as, Transaction: Currency exchange rate is maintained for below combination: Consider below document is entered. Document is entered with CHF.
