Which financial entity do exchange rates apply to in SAP?

Exchange rates in SAP apply to all company codes because they establish the standard for currency conversion for financial reporting and transactions across the entire organization. Company codes are fundamental entities in the SAP financial system, representing individual legal entities that prepare their own financial statements. When transactions occur in different currencies, the system utilizes exchange rates to ensure that financial data is accurately represented in the local currency of each company code.

By applying exchange rates universally across all company codes, SAP allows for consistent handling of foreign currency transactions and ensures that consolidated financial statements are calculated accurately across the enterprise. This is crucial for organizations with multiple subsidiaries or departments operating in various currencies, as it enables seamless integration and reporting of financial information.

In contrast, other options might suggest limited application to specific entities or types of transactions, which would undermine the effectiveness of financial reporting in a global context. Thus, the applicability of exchange rates to all company codes ensures comprehensive coverage and precision in financial management within SAP.