Balances in local currency only

Definition

Indicates that balances are updated only in local currency when users post items to this account.

Use

You would set this indicator for accounts in which you do not want the system to update transaction figures separately by currency.

Setting this indicator for accounts managed on an open item basis affects the clearing procedures. See the example below.

Procedure

Set the indicator in cash discount clearing accounts and GR/IR clearing accounts. It cannot be set in reconciliation accounts for customers or vendors. Setting it in all other instances is optional.

It is usually set for particular balance sheet accounts including:

Accounts which are not managed on an open item basis and not kept in foreign currencies.

Accounts which are managed on an open item basis and have the same types of items posted in different currencies, but always allow clearing to be made if the local currency amounts correspond.

Examples

You set up a clearing account for goods receipts and invoice receipts and manually post these items to it. You post invoice receipts in the invoice currency and goods receipts always in the local currency.

 
Invoice receipt            1000 DEM       600 USD

Goods receipt 600 USD

Both items can be cleared if the clearing account balances are recorded in local currency only. If you have not set the indicator for this account, the system will translate DEM to USD during the clearing procedure in order to determine the amount in USD required to clear 1000 DEM. If the translation rate is .65 USD per DEM, then the system displays 650 USD for the invoice receipt and 600 USD for the goods receipt when the open items are processed.

This means that to clear both of these items, you will also have to enter a difference posting for 50 USD, and the system will automatically make an additional exchange rate difference posting for this amount.