After the foreign currency valuation run, how does the system evaluate the balance of this account?

You have a bank account in foreign currency. During the period you have posted various deposits to and withdrawals from the account.

After the foreign currency valuation run, how does the system evaluate the balance of this account?
A . in local currency, with the exchange rate valid on the last day of the period
B . In foreign currency, converted to local currency on a statistical ledger.
C . In foreign currency, with no need for conversion.
D . In local currency, with the exchange rate valid for each transaction

Answer: A

Explanation:

For a bank account in foreign currency, the SAP S/4HANA Cloud system evaluates the balance of this account in local currency using the exchange rate valid on the last day of the period during the foreign currency valuation run. This approach ensures that the financial statements reflect the most current value of foreign currency balances in terms of the local currency, accounting for any fluctuations in exchange rates throughout the period. This valuation is essential for accurate financial reporting and risk management.

References:

SAP S/4HANA Cloud Finance documentation on foreign currency valuation Guidelines for currency valuation in SAP Financial Accounting