| # Glossary for currency initialization conversion cluster A group of companies and/or currencies that must be converted together with the conversion details such as the type of conversion to be processed. conversion-cluster company One of the companies that will be converted when you process the cluster. currency difference A difference caused by currency exchange-rate fluctuations, for example, during the period that an invoice amount is outstanding. During currency initialization the rate fluctuation can be caused by the recalculation of the rates based on the amounts in the new currencies. dependent currency system A currency system in which you can use multiple home currencies within the same logistic company. For most entities, the financial company determines the local currency that is used. All transactions are registered in all the home currencies. Currency rates are defined between the external currencies and the reference currency, and between the reference currency and the other home currencies. Transaction amounts are first converted into the reference currency. Then the transaction amount in the reference currency is converted into the other home currencies. EMU currency The national currency of a country participating in the European Economic and Monetary Union (EMU) before the introduction of the euro. enterprise unit A financially independent part of your organization that consists of entities such as departments, work centers, warehouses, and projects. The enterprise unit’s entities must all belong to the same logistic company, but a logistic company can contain multiple enterprise units. An enterprise unit is linked to a single financial company. When you carry out logistic transactions between enterprise units, these are posted in the financial companies to which each enterprise unit is linked. The enterprise structure models define the relationships between the enterprise units, and in this way the goods transfer that can take place between the enterprise units. To use invoicing and pricing between enterprise units, you must link the enterprise units to internal business partners. You can use enterprise units to do separate financial accounting for parts of your business. For example, you can define enterprise units for separate parts of your organization that belong to one logistic company but that are located in different countries. The accounting of each enterprise unit is performed in each country's national currency and in the financial company linked to the enterprise unit. external euro initialization External euro initialization converts to euros the transaction currencies and the transaction amounts of open orders and contracts that are related to the business partners (customers or suppliers) for which you process the external conversion. FASB52 translation adjustment Guidelines for translating amounts in the local home currency with the correct currency rates before reporting in a different currency than the reference currency. functional currency The main currency the legal entity is doing business in. This currency must be used for corporate reporting and should comply with the US GAAP/IFRS requirements for functional currencies. independent currency system A currency system in which all financial companies and logistic companies that are related to each other in the enterprise structure model use the same two or three home currencies. All transactions are registered in all the home currencies. Currency rates are defined between the transaction currencies and all home currencies. Transaction amounts are converted directly from the transaction currency into the home currencies. internal euro initialization Internal euro initialization changes the current home currency to euro and converts all the amounts in the current home currency to euros. local home currency The home currency that is the legal currency of the country in which the company is established. Tax reporting must usually be done in the local home currency. logistic area A combination of logistic companies and financial group companies. A logistic company contains multiple enterprise units. Financial group companies contain one or more financial groups. The logistic company’s enterprise units can be linked to a financial company within one financial group company. The enterprise units can also be linked to financial companies within different financial group companies. Also, enterprise units within different logistic companies can be linked to one financial company. Finally, it is possible that some financial companies within a financial group company are not linked to an enterprise unit. logistic currency See: reference currency logistic currency See: reference currency reference currency The home currency that is used for the company’s accounting. The reference currency is the base for all calculations with currencies. If it is unclear which of the home currencies must be used, the reference currency is used. In a multicurrency system, the reference currency is used when the Rotate Currency function is not available. In a multicurrency system you can use up to three home currencies. One of these must be the same as the reference currency. The three home currencies that you can define for a company are: The company's local currency Reporting currency 1 Reporting currency 2 Synonym: logistic currency standard currency system Available as of ERP LN FP5, a currency system in which foreign currency transactions are translated straight from the transaction currency to the local currency, without triangulation through the reference currency. By default, currencies are translated from the transaction currency into the reporting currency. However, reporting currencies can also be translated from the local currency, depending on the particular reporting currency’s translation-method setting. Note The standard currency system replaces the other currency systems previously used in LN. |