SAP Financial Accounting (SAP FI) Practice Exam

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What reflects local accounting principles in a depreciation key?

The way expenses are calculated
The formula used for depreciation calculation
The reporting standards adopted
The capital structure of the organization

The correct answer is: The formula used for depreciation calculation

The correct answer focuses on the formula used for depreciation calculation because depreciation keys in SAP Financial Accounting define the method and rules by which an asset's depreciation is calculated. Different local accounting principles can dictate various methods and formulas for calculating depreciation, such as straight-line, declining balance, or units of production. These methods will have parameters that can be set within the depreciation key to reflect the legal and financial requirements of the specific jurisdiction, thereby ensuring compliance with local accounting standards. Therefore, the structure of these formulas is crucial to align with local practices, making this option the most relevant. While the way expenses are calculated and the reporting standards adopted may influence accounting practices, they do not specifically describe the mechanics of how depreciation is mathematically determined. Similarly, the capital structure of the organization refers to its financing sources and does not impact the technical calculation of depreciation itself.