SAP Financial Accounting (SAP FI) Practice Exam

The foreign currency program is performed on which types of items?

1. Accounts payable

2. Open items of an account

3. Expense accounts

4. Cash accounts

The correct answer is: Open items of an account

The foreign currency program is specifically designed to manage and re-evaluate the open items of an account. Open items are transactions that have not yet been fully processed or cleared in the accounting records. This includes outstanding invoices or pending payments that are denominated in foreign currencies. The foreign currency program ensures that these items are accurately valued at the current exchange rates, allowing for precise financial reporting and compliance with international accounting standards. By focusing on open items, the program helps organizations to maintain accurate financial statements and manage foreign currency risk more effectively. This process includes reassessing the value of these items periodically, such as at the end of a reporting period, which is essential for preparing accurate financial reports. Other types of items, such as fully paid accounts payable or settled transactions, do not require ongoing valuation adjustments related to fluctuating exchange rates provided they do not have open items remaining. Thus, while businesses may deal with foreign currency in various accounts, the specific application of the foreign currency program is tailored to address the nuances and needs of open items.