Defining "Balances in Local Currency Only"

Use

When creating a G/L account in a company code, you can decide whether the transaction figures should only be kept in the local currency for this account.

You have to set this indicator for clearing accounts you use to clear line items in various currencies with one local currency amount and without posting any exchange rate differences that may occur.

Caution Caution

Do not set this indicator for A/P A/R reconciliation accounts.

End of the caution.

You have to set the indicator for the following accounts:

Cash discount clearing accounts
Clearing accounts for goods receipt / invoice receipt

The indicator is usually set for the following balance sheet accounts:

Accounts without open item management in which no foreign currencies are managed

Example Example

You manage a clearing account for goods received and invoices received. This account is posted to manually. You post the incoming invoices in an invoice currency and the goods received in all cases in the local currency.

End of the example.

	Foreign currency	Local currency
Invoice receipt	1000 USD	1580 DEM
Goods receipt		1580 DEM

If the indicator is set, the two line items are cleared.

If the indicator is not set, the system also posts any exchange rate difference as well when clearing. The system then determines the DEM amount necessary to clear the 1000 USD amount. If the exchange rate is 1.60 for example, the system makes a posting of 20 DEM for the exchange rate difference to clear the two line items.