What is functional currency in SAP FS-BA-PM-AFP - Accounting for Financial Products?

SAP Term: functional currency

• Component: FS-BA-PM-AFP

• Component Name: Accounting for Financial Products

• Description: The functional currency depends on the economic environment in which the entity trades. For example, if the company is headquartered in Germany, but trades mainly with goods from Japan, the functional currency is yen. The functional currency of an entity can also be the local currency. The functional currency is used to translate amounts disclosed in transaction currency. However, amounts in transaction currency are not translated directly to other currency types, such as the local currency or group currency, but via the functional currency.

Smart SAP Assistant

• Key Concepts: 
  Functional currency is a term used in SAP's Accounting for Financial Products (FS-BA-PM-AFP) component. It is the currency in which the financial transactions of an organization are recorded and reported. This currency is usually the same as the local currency of the organization, but it can also be different. 
  
  How to use it: 
  In SAP, functional currency is used to record and report financial transactions. It is important to note that this currency may be different from the local currency of the organization. To set up functional currency in SAP, go to the Financial Accounting (FI) module and select the “Currency” tab. From there, you can select the desired functional currency for your organization. 
  
  Tips & Tricks: 
  When setting up functional currency in SAP, make sure to select a currency that is consistent with your organization’s local currency. This will ensure that all financial transactions are recorded and reported accurately. 
  
  Related Information: 
  For more information on setting up functional currency in SAP, please refer to the official SAP documentation here: https://help.sap.com/viewer/product/SAP_ERP_Financials/6.0_SPS12/en-US/f9f8d7a3e2b14c8a9f3d7c2b5f1e4d6a.html