SAP Business One Certification Practice Exam

In what currency are exchange rate differences transactions posted?

1. Foreign currency

2. Local currency

3. Both local and foreign currency

4. System currency

The correct answer is: Local currency

In SAP Business One, exchange rate differences are posted in the local currency. The local currency is the currency defined for a specific company and is used to maintain the primary financial records. When transactions involve foreign currencies, they are converted to the local currency for accounting purposes. This process ensures that any differences arising from fluctuating exchange rates are accurately reflected in the company's financial statements. By posting the exchange rate differences in the local currency, businesses can maintain consistent and accurate financial reporting that aligns with their operational currency. This allows for a more straightforward analysis of financial performance and variance due to currency fluctuations. The other options do not fully reflect how SAP Business One processes these transactions: while foreign currency transactions are recorded, the resulting exchange rate differences are ultimately reported in the local currency. System currency typically refers to a broader setting that may not pertain specifically to transaction entries. Therefore, the emphasis on local currency aligns with standard accounting practices in managing exchange rate differences.