Re: [sap-acct] What's relationship among these FI concepts

Posted by VidhyaDhar (User-friendly SAP FI Consultant)
on Jun 29 at 3:47 AM

SAP supports 218 currencies as of now , each currency denoted by a currency
key. Each company code adopts one currency as local currency ( company code
currency) and the others are foreign currencies to such company code.

When your company code has reason to transact with overseas customers and /
vendors in their currencies, you need to equate their currency with your
local currency. This is so because transactions happen in foreign currencies
whereas your country specific statutory reporting of the same transactions
happen in local currency. Therefore you need a way to equate each foreign
currency in terms of your local currency.

You are aware that every commodity has a cost price, selling price and an
average price. Money is also such a commodity and SAP calls the buying ,
selling and average exchange rates as Exchange Rate Types. Some currencies
are strong and some currencies are weak ( depending on the inflationary
trends prevailing in the country) and a currency can be equated as equally
strong ( translation ratio 1:1) , both currencies not equally strong ( 10:1,
100:1 ) etc. All these are time-specifically defined.



---------------Original Message---------------
From: godslavery
Sent: Wednesday, June 29, 2011 2:25 AM
Subject: What's relationship among these FI concepts

Hi, I don't catch up with the exact meaning of these 3 concepts : currency key, exchange rate type, translation ratios.


Is here the 2 RMBs have their own "currency key" and "exchange rate type" respectively, and "translation ratios ( or "exchange rate") are distinguished by "exchange rate type"?

What's the relationship among all those items, I am totally confused.

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