Indicator: Only Manage Balances in Local Currency (FS00)

[Former Member]

Hi,

I am trying to undestand the use of this flag in the G/L master data account.

I understand the following case 1) "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"

But I cannot understand this other case:

2) "Accounts which are not managed on an open item basis and not kept in foreign
currencies." What does it mean with  "not ketp in foreign currency"?

Where can I see the difference between of having this flag and not having?

Which transactions will be affected because of having this flag?

Which type of accounts (except account of the case 1 -example GR/IR-)  should have this flag? 

I was reading many discussions of this flag but I could not soved my doubt.

Thanks,

Cecilia

[Former Member · Accepted solution]

Hi

Q No-1. Balance in local currency only means balances are updated in local currency otherwise balance will be updated both foreign and local currency and exchange rate will post for the account.

Q No-2 Some accounts may or may not managed open item basis but that account need not requires to post exchange rate difference. For example cross company code clearing accounts.

Note: This option must be select for the account, which account need not require to post foreign exchange rate difference (forex gain or loss).

Regards

Nakul

[former_member211635]

Hi Cecilia,

The flag amount in local currency is set in order to ensure that if the local currency (company code currency) is nullified with a debit and credit (Even when the debit and credit transactions are in different currency) i.e. it does not posts exchange rate difference while clearing

e.g. Loan Account (Company code currency INR)

Entry

Bank Dr (USD 100) INR 60000

     To Loan A/c

Repayment

Loan Dr (USD  100) INR 61000

     To Bank

Now there are two scenarios, which will be resultant of balances in local currency tick box

1. Check box ticked:- Two line items will be cleared without any foreign exch gain / loss

2. Check box unticked:- system will post the difference of Rs. 1000 to foreign exchange gain / loss account

Generally all balance sheet accounts are ticked with check box

Tick is not set for reconciliation accounts for cust, vend, assets (b/s accounts) since variation in these accounts is a difference which is to be accounted

If the items are not open items, then there is no need to clear and hence there wont be the case of foreign exch gain / loss

Hope this helps

Thank You

Nishu

[orhan_]

Hey Cecilia,

I have the same doubt as you on 2). I understand the first case but the second case I don't really understand. Did you get any answer on this that you can share?