Can anyone guide me on the exact use of following two points in "Control Data" section of g.l master data:- 1) Account Currency 2) Only balance in local currency Kindly expalin with practical example.

Account Currency indicates the currency in which this Account is held.

When creating a G/L account, you must define the currency in which the account is to be kept.
This defines the following:

• The currency used for postings made to this account
• The currency in which transaction figures are updated and the account balance is displayed

You specify the account currency in the company code area of the G/L account master data. This allows you to keep the G/L account in the local currency of each company code. 


This is especially useful for international groups that have all subsidiaries use the same chart of accounts but with the accounts kept in the local currency.

Features
When setting the account currency, you have two options available:

• If we Enter the local currency of your company code.                                                                                         The system automatically uses the local currency that you defined when creating the company code as the default value. This allows posting to the G/L account in any currency. 
  
  
  When you make a posting in a foreign currency, the amount is translated into the local currency. For more information, see  Posting a Document in a Foreign Currency.
  
  
  The transaction figures are kept as follows:
  • In the local currency, that is, the total of all the amounts posted in the local currency
  • In the individual currencies, that is, the total of all the amounts posted in various currencies.
• If we Enter a foreign currency.                                                                                                                                  If the Currency is other than Company Code Currency then, User can only post items into this Account in which the Account is mentioned.                                                                                                          The transaction figures and the account balance are kept in the foreign currency entered and in the local currency.

Scenario: If you have bank account in US wherein only USD currency is posted, so your business does not want to post any other currency so you will put USD in this field.

Balances in Local Currency’ Only

It means the balances are updated only in local currency when users posts to this Account.
even if the document posted in foreign currency. In FS10N or FAGLB03, you will not be able to display balance in foreign currency..

Example: Consider an invoice for USD 1,000, which on that day translates into an amount of INR 45,000 with an exchange rate of I USD=INR 45. Imagine that when the goods are received, the exchange rate was 1 USD=INR 44.

§         If the indicator is set, the balances are updated only in local currency @ Rs.45000 the system ignores the exchange rate as if the line items have been maintained only in the local currency (INR)(Rs45000), and the items are cleared.

§         If the indicator is NOT set, the system makes a posting for the ‘exchange rate difference’ (INR 1, 000) before clearing the two line items.

This Option is used both for 

• Cash Discount Clearing 
• GR/IR Clearling Account 
• It is also used for Balalnce Sheets Accounts which not managed Open Item basis Or not kept in foreign Currency.(but not used for Customer / vendor reconciliation Accounts.) 

you need to set this indicator so that the transactions are posted without posting any exchange rate difference that otherwise might arise.